The USD/CAD pair trades slightly lower near 1.3670 during Thursday’s early European session. The US Dollar weakens against the Canadian Dollar as uncertainty around US economic policy and renewed concerns over higher import tariffs pressure the Greenback. Investors are now awaiting Canada’s Gross Domestic Product (GDP) figures and the US Producer Price Index (PPI) report due on Friday.
On Wednesday, US Trade Representative Jamieson Greer said that President Donald Trump is considering increasing tariffs to 15% or more on several countries in the coming days. The authority would apply for up to 150 days unless Congress grants an extension. These remarks have reduced confidence in the US Dollar and encouraged selling pressure.
Ongoing geopolitical tensions may also support crude oil prices, which typically benefits the Canadian Dollar. Canada is a major oil exporter, so stronger oil prices usually strengthen the CAD. Traders are also watching developments in the US-Iran nuclear discussions, as officials from both countries are scheduled to meet in Geneva for another round of indirect talks.
Market attention now shifts to the US January PPI data. Economists expect producer inflation to rise 0.3% month-on-month, slower than December’s 0.5% increase. On a yearly basis, PPI is forecast to grow 2.6% compared to the previous 3.0%. However, a stronger-than-expected reading could reduce expectations of future rate cuts and provide short-term support to the US Dollar against the Canadian Dollar.
