FX.co ★ Canadian Dollar Halts Advance

The Canadian dollar stabilized around 1.37 against the US dollar, pausing its recent upward trajectory near monthly highs. This stabilization is attributed to stronger oil prices and a consistent domestic policy outlook, which are increasingly counterbalanced by revived concerns over trade and geopolitical issues. The Canadian currency continues to be supported by the energy sector, as crude prices climb due to several factors: a decrease in Russian fuel oil exports, production disruptions in key US regions, and fewer Venezuelan shipments to China. This tightening of high-sulphur fuel supply benefits Canada’s terms of trade, positioning it as the largest crude supplier to the United States. Meanwhile, inflation trends have diminished the likelihood of near-term monetary easing. The headline Consumer Price Index stands at 2.4%, above the Bank of Canada's 2% target, even though core inflation measures have softened, suggesting that the policy rate will remain at 2.25% for an extended period. Nevertheless, the appreciation of the Canadian dollar has been limited by revived trade tensions after President Trump threatened to impose 100% tariffs on Canadian goods if Ottawa proceeds with a trade agreement with China.