Select Language

USD/CAD treads water above 1.3700 as tariff tensions ease following US-China meeting

blockHeadVisual
  1. HOME
  2. Get information
  3. World FX news
  4. USD/CAD treads water above 1.3700 as tariff tensions ease following US-China meeting

World FX news

search
Breaking news

USD/CAD treads water above 1.3700 as tariff tensions ease following US-China meeting

  • X
  • facebook
  • LINE
  • RSS
  • X
  • facebook
  • LINE
  • RSS
New update 2025.06.10 13:33
USD/CAD treads water above 1.3700 as tariff tensions ease following US-China meeting

update 2025.06.10 13:33

  • USD/CAD receives support from improved risk sentiment amid easing US-China tariff dispute.
  • US-China advisors are expected to meet again in London on Tuesday.
  • Improved crude Oil prices contribute support for the commodity-linked CAD.

USD/CAD extends its winning streak for the third successive session, trading around 1.3700 during the Asian hours on Tuesday. The pair appreciates as the US Dollar (USD) gains ground as market sentiment improves amid easing tariff war tensions between the United States and China.

Treasury Secretary Scott Bessent mentions discussions held on Monday as a "good meeting," meanwhile Commerce Secretary Howard Lutnick noted them as "fruitful," increasing expectations of progress in improving relations between the two countries. Again, on Tuesday, officials from the world's two largest economies are expected to meet to continue the trade talks with expectations of easing tensions over shipments of technology and rare earth elements, per Bloomberg.

Additionally, the Greenback may gain ground due to increased odds of the Federal Reserve (Fed) keeping its benchmark interest rate unchanged at its next two monetary policy meetings, driven by recent stronger-than-expected US jobs data. Traders now turn their attention to the US Consumer Price Index (CPI) inflation, scheduled to be released on Wednesday, seeking fresh insights into the Federal Reserve's monetary outlook.

However, the upside of the USD/CAD pair could be restrained as the commodity-linked Canadian Dollar (CAD) may receive support from the improved Oil prices. As Canada is the largest crude exporter to the United States (US), higher Oil prices provide support for the CAD.

West Texas Intermediate (WTI) Oil price remains steady above $64.50 per barrel at the time of writing. Crude Oil prices receive support from positive risk sentiment, driven by a potential trade deal between the US and China.

Canadian Dollar FAQs

The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada's largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada's exports versus its imports. Other factors include market sentiment - whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) - with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.

The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.

The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada's biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.

While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada's case is the Canadian Dollar.

Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.

Date

Created

 : 2025.06.10

Update

Last updated

 : 2025.06.10

Related articles

Show more

Writer

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?
No loading Yes loading

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Previous article

prev

USD/INR falls at open while US-China trade talks enter second day

Next article

India Gold price today: Gold falls, according to FXStreet data

prev

Most viewed

US CPI data set to show mild inflation as markets assess tariff impact

The Consumer Price Index (CPI) data for May is expected to highlight a pickup in inflation in the United States (US).
New
update2025.06.11 12:00

Silver Price Forecast: XAG/USD maintains position above $36.50 near 13-year highs

Silver price (XAG/USD) holds ground after registering over a 0.50% loss in the previous session, trading around $36.60 per troy ounce during the Asian hours on Wednesday. The price of the grey metal maintains a position near a 13-year high of $36.89, which was reached on Monday.
New
update2025.06.11 11:47

Japanese Yen hangs near two-week low against a slightly firmer USD

The Japanese Yen (JPY) remains close to a nearly two-week low touched against its American counterpart the previous day, though any further decline seems elusive.
New
update2025.06.11 11:24

Australian Dollar loses ground as US Dollar advances amid improving US-China dialogue

The Australian Dollar (AUD) declines against the US Dollar (USD) on Wednesday, retracing its recent gains. However, the AUD/USD pair may gain ground amid easing trade tensions between the United States (US) and China.
New
update2025.06.11 11:13

WTI attracts some buyers above $63.50 on optimism around US-China trade talks

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $63.80 during the Asian trading hours on Wednesday. The WTI price edges higher as traders digest the result of trade talks between the United States and China.
New
update2025.06.11 10:59

OPEC Secretary General says oil demand growth to continue, no peak in sight

OPEC Secretary General Haitham Al Ghais said on Tuesday that oil demand growth will remain robust over the next two and a half decades as the world population grows, per Reuters. 
New
update2025.06.11 10:47

PBOC sets USD/CNY reference rate at 7.1815 vs. 7.1840 previous

On Wednesday, the People's Bank of China (PBOC) set the USD/CNY central rate for the trading session ahead at 7.1815 as compared to the previous day's fix of 7.1840 and 7.1801 Reuters estimate.
New
update2025.06.11 10:15

US appeals court allows US President Donald Trump tariffs to stay in place - Bloomberg

A federal appeals court has ruled that US President Donald Trump's broad tariffs can remain in effect while legal appeals continue, per Bloomberg. 
New
update2025.06.11 09:59

US, China officials agree on plan to ease trade tensions - Bloomberg

The United States (US) and China agreed to a preliminary deal on how to implement the consensus the two sides reached in Geneva, per Bloomberg.
New
update2025.06.11 09:37

USD/CAD flat lines above 1.3650 as investors track US-China trade talk progress, US CPI data

The USD/CAD pair holds steady near 1.3670 during the early Asian session on Wednesday. Easing trade tension between the United States (US) and China could underpin the US Dollar (USD). Investors will closely monitor the result of the US-China trade talks.
New
update2025.06.11 09:26

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

arw
  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Line

Line
Facebook

Facebook
X

Twitter
Cancel