USD/CAD holds positive ground near 1.3700 on fresh tariff threats

• USD/CAD trades with mild gains around 1.3690 in Monday's Asian session. 
• Trump's latest tariff threats brought renewed uncertainty to markets, weighing on the Canadian Dollar.  
• The Canadian Unemployment Rate unexpectedly dropped in June to 6.9%. 

The USD/CAD pair posts modest gains near 1.3690 during the Asian trading hours on Monday. The Canadian Dollar (CAD) edges lower against the Greenback as US President Donald Trump intensifies the trade war with fresh tariffs on the European Union (EU) and Mexico. The Canadian June Consumer Price Index (CPI) inflation data will be in the spotlight later on Tuesday. 

Trump threatened to impose a 30% tariff on the EU and Mexico imports, two of the largest US trading partners, beginning August 1. Last week, Trump also announced a 35% tariff rate for goods imported from Canada, beginning on the same period. The new measures come on top of existing 50% tariffs on Canadian steel and aluminum. This, in turn, could weigh on the Loonie in the near term, as Canada is the largest supplier of both metals to the US. 

On the other hand, surprisingly strong Canadian June employment data quash Bank of Canada (BoC) rate cut odds, which might help limit the CAD's losses. The Unemployment Rate in Canada ticked lower to 6.9% in June from 7.0% in May, according to Statistics Canada on Friday. This figure came in stronger than the 7.1% expected. Meanwhile, the Canadian economy added 83.1K jobs in June versus 8.8K prior. Economists were expecting no change in employment. 

The BoC is expected to keep its benchmark interest rate on hold later this month after the labor market delivered a surprise hiring surge in June. Financial markets are now pricing a chance of just 13% for a quarter-point rate reduction at the BoC's July decision, according to LSEG Data & Analytics.