FX.co ★ Canadian Dollar Eases from 6-Month High

The Canadian dollar has experienced a decline, moving toward $1.39, down from a six-month high of US$1.38 reached on April 22nd. This shift is largely attributed to the strengthening of the US dollar. The US currency saw renewed support following President Trump's decision to ease his criticisms of Federal Reserve Chair Jerome Powell and his suggestions of potential tariff alleviations with China. Additionally, the recent downgrade by the International Monetary Fund (IMF), forecasting Canada's GDP growth at 1.4% for 2025, has sparked fresh concerns about domestic demand, limiting the potential appreciation of the Canadian dollar. Furthermore, the Bank of Canada's decision to maintain its benchmark interest rate at 2.75% underscores a cautious approach amidst the uncertain outlook for US tariffs. This unclear situation presents a dual scenario: one that could either support stable growth with inflation around the 2% mark or, should tariffs escalate, trigger recessionary challenges alongside rising inflation.