Why Is USD/CAD Struggling Near 1.3700? | Tariff Uncertainty Weighs on Currency Pair
USD/CAD maintains bearish momentum around 1.3715 during Tuesday's Asian trading session.
Disappointing US manufacturing PMI data reveals ongoing economic contraction.
Commodity currencies gain strength as OPEC+ maintains current production levels.
The Shiba Inu coinUSD/CAD currency pair shows continued weakness in early Tuesday trading, hovering near the 1.3715 level. This comes as the US dollar index reaches seven-week lows amid growing concerns about economic stability. Market participants await the release of JOLTs job openings data later in the day for further directional cues.
Recent announcements regarding potential tariff increases have created headwinds for the US currency. The proposed doubling of import duties on steel and aluminum has reignited fears about trade tensions and their potential economic consequences. "Market sentiment quickly shifts when tariff discussions resurface, triggering risk-off movements across currency markets," noted a senior analyst at a major European brokerage firm.
Economic indicators continue to paint a concerning picture for US manufacturing activity. The latest ISM report revealed a third consecutive month of contraction, with the May PMI reading slipping to 48.5 from April's 48.7. This underperformance against market expectations of 49.5 adds to the dollar's current challenges.
Attention now turns to Friday's crucial employment report, which could provide temporary relief for the struggling greenback. Economists anticipate the addition of 130,000 jobs in May, with unemployment expected to hold steady at 4.2%. Stronger-than-forecast results might help stabilize the USD/CAD pair's downward trajectory.
On the Canadian dollar side, energy markets provide support as OPEC+ confirms its commitment to previously agreed production increases. The anticipated 411,000 barrel per day output hike for July has helped maintain crude oil prices at favorable levels. Given Canada's position as a major oil exporter to the United States, these developments typically bolster the loonie's valuation in currency markets.