FX.co ★ Canadian Dollar Halts Rebound

The Canadian dollar was trading at approximately 1.36 against the US dollar, having rebounded significantly from its low of 1.374 on July 17th. This rise was buoyed by the weakening of the US dollar, which was prompted by renewed optimism that trade agreements between the US and Japan, as well as the US and the EU, would prevent further tariff escalations. Additionally, firmer crude oil prices bolstered Canada's oil export revenues, providing further support for the Canadian dollar. However, this recovery has hit a pause as attention shifts back to the upcoming August 1st tariff deadline. The impasse in US-Canada negotiations and Prime Minister Carney's firm stance on avoiding "bad deals" have increased concerns about potential punitive tariffs. Meanwhile, stronger retail sales for June are likely to support domestic growth expectations and reduce the pressure on the Bank of Canada to continue its loosening cycle.