- USD/CAD weakens to around 1.3665 in Monday’s Asian session.
- Trump said he will impose global tariffs of 15%.
- A rise in crude oil prices underpins the commodity-linked Loonie.
The USD/CAD pair drifts lower to near 1.3665 during the Asian trading hours on Monday, pressured by lower crude oil prices and US tariff uncertainty. Traders await the release of the US Producer Price Index (PPI) report for January, which is due later on Friday.
The US Supreme Court struck down President Donald Trump’s sweeping tariffs that he pursued under the International Emergency Economic Powers Act (IEEPA), a law meant for use in national emergencies. Trump has responded by lashing out at the court and imposing a blanket 15% levy on imports, which undermines the US Dollar (USD).
Economists said most Canadian exports were already exempt from IEEPA tariffs, while product-specific tariff measures that have been a larger issue for the Canadian economy were not impacted by the court ruling.
Meanwhile, persistent geopolitical risks could boost crude oil prices and provide some support to the commodity-linked Loonie. The New York Times reported on Sunday that Trump is considering limited airstrikes on Iran. He said that if diplomacy or any initial targeted US attack does not lead Iran to give in to his demands that it give up its nuclear program, he will consider a much bigger attack in the coming months.
It is worth noting that Canada is a major oil-exporting country, and high crude oil prices generally have a positive impact on the CAD. The next round of talks between the US and Iran will be on Thursday in Geneva. However, Trump weighs options for US action if the negotiations fail.
