The Canadian dollar gains against the U.S. dollar on Tuesday. This movement came as oil prices climbed higher. At the same time, investors doubted whether the U.S. would impose new tariffs. The loonie traded 0.2% higher at 1.4285 per U.S. dollar, or 70.00 U.S. cents. It fluctuated between 1.4280 and 1.4345 during the session.
U.S. President Donald Trump recently signed proclamations for new tariffs. The measures target steel and aluminum imports, with Canada as a major supplier. However, these tariffs will not take effect until March 12. Analysts believe the tariffs are more about negotiation than economic impact.
Oil prices played a key role in strengthening the Canadian dollar. The price of crude oil, a major Canadian export, rose for the third consecutive day. Sanctions on Russia and Iran fueled concerns about global oil supply. As a result, U.S. crude oil futures climbed 1.4%, settling at $73.32 per barrel.
Meanwhile, the U.S. dollar weakened against a basket of major currencies. This decline further supported the loonie's upward movement. Investors also took note of Federal Reserve Chair Jerome Powell’s congressional appearance. However, Powell refrained from discussing tariffs in detail.
Canada’s latest economic data also contributed to the loonie's gains. The value of Canadian building permits surged by 11.0% in December compared to November. Year-over-year, this represented a significant 34.9% increase. The rise in multi-unit construction intentions drove this growth.
Canadian government bond yields also moved higher across the curve. The 10-year yield rose by 3.8 basis points, reaching 3.102%. This marked its highest level since February 4. Higher yields indicate investor confidence in Canada's economic stability.
Moving forward, the Canadian dollar's performance will depend on multiple factors. Oil price trends, U.S. tariff decisions, and Federal Reserve policies will all play a role. Investors will closely monitor developments to assess the loonie's future direction.
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