Canadian Dollar runs out of steam as US Dollar bids rebound

• Canadian Dollar gains have given way to a fresh bounce in US Dollar strength.
• The Loonie snapped a near-term winning streak on Thursday.
• Despite an uptick in Canadian PMI figures, market attention remains focused elsewhere.

The Canadian Dollar (CAD) eased off the gas pedal on Thursday, slowing a near-term bull run and snapping a four-day winning streak against the US Dollar (USD) as Greenback bidding bumped upwards. United States (US) President Donald Trump's long-awaited "reciprocal" tariffs, initially announced in early April and delayed multiple times, appear to have finally gone into effect.

Mid-tier Canadian Purchasing Managers Index (PMI) figures barely moved the needle on Thursday as markets broadly attempt to shrug off tariff worries. Donald Trump's whiplash tariff policies, which have been dragged through multiple delays and suspensions over the past five months, have finally kicked off. Double-digit tariff levels are now being applied across the board, on virtually all trading partners with the US, seemingly arbitrarily.

Daily digest market movers: Tariffs have begun, and now markets await the fallout

• The Canadian Dollar is poised to slow its recent bullish momentum against the US Dollar, holding flat on Thursday near 1.3740.
• USD/CAD remains tangled in the 50-day Exponential Moving Average (EMA) as Loonie markets get strung along the middle.
• The Canadian Ivey PMI rose more than expected in July, rising to 55.8 from the previous 53.3 as Canadian businesses dare to hope that the worst of US-Canada trade tensions and tariffs will be avoided.
• Setting aside tariff talk, US Initial Jobless Claims and Unit Labor Costs both rose faster than expected. The mid-tier data releases aren't immediately market-shifting, but do point toward a hellish mix of unexpected US labor market weakness and ongoing inflationary pressures.
• Inflation from rising labor costs coupled with decaying labor markets, typically known as "stagflation", is beginning to take bites out of normally solid US economic data, casting a cloud over future US prospects.

Canadian Dollar price forecast

The Canadian Dollar gained ground against the US Dollar in a four-day stretch that bolstered the Loonie over 1% against the Greenback, but CAD momentum looks to be slowing as the USD/CAD chart approaches key technical levels. 1.3700 remains a key technical hurdle as the USD/CAD chart struggles to find momentum below the 50-day EMA at 1.3740, and a pivot into renewed US Dollar strength will send USD/CAD back into a bullish run toward the 200-day EMA near 1.3920.

USD/CAD daily chart