USD/CAD extends losses for a second consecutive session, trading around 1.3740 during Asian hours on Tuesday. The pair comes under pressure as the US Dollar faces headwinds amid growing expectations that the Federal Reserve will continue easing policy, amplified by President Donald Trump’s calls for lower borrowing costs.
Fed signals weigh on USD
Federal Reserve Governor Stephen Miran said in a Bloomberg TV interview that recent data aligns with his outlook and that he does not see a near-term recession. Miran added that failing to ease policy could raise recession risks, while the need to dissent on a 50-basis-point adjustment diminishes as rates are reduced. These comments reinforce market expectations for continued Fed easing, keeping the USD under pressure.
Focus on US Q3 GDP
Traders are awaiting the US Gross Domestic Product (GDP) annualized reading for the third quarter, due later on Tuesday. The economy is projected to have grown at 3.2% annualized in Q3, down from 3.8% in Q2, which may influence near-term USD sentiment.
Commodity-linked CAD benefits from oil rally
The Canadian Dollar gains support from rising oil prices amid geopolitical tensions, reflecting Canada’s status as a major crude exporter to the US.
West Texas Intermediate (WTI) crude trades around $57.90 per barrel, buoyed by heightened geopolitical risks. US President Donald Trump said the US may keep or sell oil seized off the Venezuelan coast and confirmed that seized ships would also be retained. Meanwhile, Ukraine continues strikes on Russian energy infrastructure, damaging two vessels and two piers and igniting a fire in a Black Sea coastal village, a key energy corridor for Russia.
Safe-haven flows support metals, weigh on USD
The USD also struggles as precious metals rally, supported by safe-haven demand amid US–Venezuela tensions. This combination of a weakening USD and commodity strength keeps USD/CAD under downward pressure, with further movement likely to be shaped by upcoming US macroeconomic releases and ongoing geopolitical developments.
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