USD/CAD recovery extends to levels near 1.3700 boosted by risk aversion

• Fears of US tariffs letters are buoying the US Dollar on higher demand for safe assets.
• Uncertainty about the size of the levies and the new tariff deadline keeps investors on their toes.
• A decline in Oil prices after the OPEC+ supply hike added pressure on the CAD earlier on Monday.

The US Dollar accelerated its recovery against the Canadian Dollar on Monday with renewed concerns about US tariffs fuelling a rush for safety, as the July 9 deadline approaches.

The Greenback is trading 0.5% higher on the day, and 0.8% above last week's lows as Trump announced letters to "some countries" specifying the tariffs that will be applied to their products.

Higher tariffs, lower Oil prices hurt the CAD

When those tariffs will come into effect remains unclear, as the Treasury Secretary Scot Bessent pointed to August 1 as a potential new deadline, which might give some margin to negotiate agreements with countries other than China, the UK and Vietnam, the oly ones that were able to cut a deal with the US since April 2.

The Canadian Dollar came under pressure at the market opening times amid lower Oil prices. OPEC+ countries approved a larger-than-expected increase in Crude supply over the weekend and pointed to another such increase in September.

The US benchmark WTI prices declined below the $65.00 level, dragging the Canadian Dollar down with them, as Oil is Canada's main export, but the pair trimmed some losses as Oil prices regained some ground and returned to the previous range, above $66.00.