The USD/CAD pair is advancing for the second consecutive session, trading near 1.3880 during the Asian session on Monday. The US Dollar (USD) is gaining traction, bolstered by signs of easing trade tensions between the US and China.
On Friday, reports indicated that China had exempted certain US imports from its 125% tariffs, sparking optimism that the long-running trade dispute between the world’s two largest economies may be nearing a resolution. However, a Chinese embassy spokesperson denied the reports, telling Reuters that no tariff negotiations were taking place between China and the US and urging Washington to “stop creating confusion.”
The US Dollar Index (DXY), which measures the USD against a basket of six major currencies, is also seeing gains for the second day, trading near 99.70. Meanwhile, the Federal Reserve (Fed) remains in a blackout period ahead of the Federal Open Market Committee (FOMC) meeting scheduled for May 7.
Adding to the complexity, US Agriculture Secretary Brooke Rollins stated on Sunday that the Trump administration continues daily discussions with China about tariffs, while also reporting that trade deals with other nations are “very close.”
The Canadian Dollar (CAD), which is closely tied to commodity prices, is under pressure due to declining crude oil prices. West Texas Intermediate (WTI) crude has been sliding, as US-Iran nuclear talks raise the potential for Iranian oil returning to the market. Additionally, speculation that the Organization of the Petroleum Exporting Countries (OPEC+) could increase production for a second consecutive month has further weighed on oil prices, impacting the CAD.
