The Canadian dollar declines slightly on Wednesday as U.S. Treasury yields climbed higher. Concerns over potential U.S. trade tariffs added pressure to the loonie. It fell 0.2% to 1.4390 against the U.S. dollar, equivalent to 69.49 U.S. cents.
Last month, the Canadian dollar reached its lowest point in nearly five years at 1.4467. This decline stemmed from a hawkish Federal Reserve and tariff threats from the U.S. President-elect.
Market analysts linked the recent USD strength to renewed tariff concerns. George Davis, Chief Technical Strategist at RBC Capital Markets, noted that tariffs appear to be the driving factor behind the USD rebound. Reports suggest that emergency legislation is being considered for a new tariff program, further boosting the dollar.
Oil, one of Canada’s significant exports, also contributed to the loonie’s decline. U.S. crude oil futures dropped 1.4% to $73.23 a barrel due to higher U.S. fuel inventories. Meanwhile, investors are closely watching upcoming employment data from the U.S. and Canada.
Economists predict Canada’s economy added 25,000 jobs in December. However, they also expect the unemployment rate to rise slightly to 6.9% from 6.8% in November.
Canadian bond yields moved higher, mirroring U.S. Treasury gains. The 10-year Canadian yield increased by 4.1 basis points, reaching 3.343%, its highest level since November.
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