After another failure of an attempt to break through the 1.3500 mark yesterday, the USD/CAD pair dropped sharply against the background of a steady increase in oil prices due to the escalation of the conflict in the Middle East.
Today, oil prices continued to grow, which supported the loonie.
Interest in the loonie was also driven by optimism about the abolition of tariffs from the United States for the supply of metals from Canada.
On the eve of the US Treasury Secretary Stephen Mnuchin said that the United States is close to resolving the dispute on steel and aluminum tariffs with Canada and Mexico.
It is assumed that if the new trade agreement between the United States, Mexico and Canada is not ratified, Washington and Ottawa will still be able to find a common language in trade matters.
Given that the United States accounts for 75% of all Canadian exports, it is clear that this is in the interests of both countries.
According to experts, despite the local strengthening, the loonie still retains the potential for weakening.
According to data released on the eve, in April, the value of the basic consumer price index in Canada on an annualized basis decreased from 1.6% to 1.5%. This dynamics of core inflation, apparently, reflects the problems with the activity of consumers in the domestic market. It is possible that under such conditions, the Canadian central bank will have to return to the issue of lowering the interest rate.
Today, the head of the Bank of Canada Stephen Poloz is set to speak, in the course of which he may well hint at the open question of further easing of the monetary rate, especially given the continuing uncertainty in foreign trade.
The material has been provided by InstaForex Company - www.instaforex.com