Canadian Dollar steadies as crude oil recovery offsets Greenback rebound

• The Canadian Dollar holds steady against the US Dollar on Monday as the USD/CAD pair consolidates recent losses.
• Crude oil prices tick higher, offering mild support to the commodity-linked Canadian Dollar, while a modest uptick in the US Dollar limits further gains.
• Traders shift focus to key data releases this week, including US Durable Goods Orders, a speech by BoC Governor Macklem, US Core PCE inflation, and Canada's Q2 GDP.

The Canadian Dollar (CAD) holds steady against the US Dollar (USD) on Monday, with the USD/CAD pair stabilizing after Friday's sharp retreat from its highest level since May 20. The decline was triggered by Federal Reserve (Fed) Chair Jerome Powell's dovish remarks at the Jackson Hole Symposium, which weighed heavily on the Greenback. While the US Dollar attempts a modest rebound to start the week, the Loonie remains supported by a slight recovery in crude oil prices, helping keep the pair anchored near recent lows.

At the time of writing, the USD/CAD pair is trading around 1.3820 during the American session. Meanwhile, the US Dollar Index (DXY), which measures the Greenback's value against a basket of six major currencies, is edging modestly higher after sliding nearly 1% on Friday. The index is currently hovering near the 98.00 level as the Dollar attempts to recover lost ground.

Trade dynamics between the United States and Canada are back in focus after Prime Minister Mark Carney confirmed on Friday that Ottawa will remove counter-tariffs on all US goods covered under the USMCA, effective September 1. The rollback, which applies to over $21 billion worth of US exports, including consumer staples such as wine, juice, household appliances, and packaged foods, marks a significant de-escalation in bilateral tensions.

Carney emphasized that Canada "currently has the best trade deal with the US" and highlighted the importance of preserving that advantage. However, tariffs on strategic sectors such as autos, aluminum, and steel will remain in place, as both sides "intensify discussions to address current trade challenges." He also noted that it is "possible to have a deal with the US that applies to strategic sectors before the USMCA review officially begins," hinting at a proactive effort to resolve disputes ahead of the 2026 review window.

Looking ahead, the economic docket will shape the next leg for the USD/CAD pair. On Tuesday, attention will turn to US Durable Goods Orders, followed by a speech from Bank of Canada (BoC) Governor Tiff Macklem on Wednesday. However, the key focus will be on Friday's dual macro releases -- the US Core Personal Consumption Expenditure (PCE) Price Index, the Federal Reserve's preferred inflation gauge, and Canada's Q2 Gross Domestic Product (GDP) figures, which will offer fresh clues on the BoC's policy path.