The USD/CAD currency pair slid to a six-month low of 1.3802 during the Asian trading hours on Monday, following gains in the previous session. The decline comes as the US Dollar (USD) remains under pressure, driven by concerns over the potential economic fallout from US tariff policies.
The US Dollar Index (DXY), which tracks the USD against a basket of six major currencies, fell by over 0.50%, reaching around 98.50—its lowest point since April 2022. The Greenback’s weakness is compounded by a more than 1% drop in the US Treasury 2-year bond yield, which now stands at 3.75%.
Federal Reserve Chairman Jerome Powell recently warned that a sluggish economy coupled with persistent inflation could undermine the Fed’s objectives and increase the risk of stagflation. Meanwhile, reports surfaced on Thursday indicating President Trump’s frustration with Powell, with the president reportedly considering removing him. Despite this, markets showed little immediate reaction to the developments, though White House economic adviser Kevin Hassett confirmed that Trump is exploring the possibility.
Despite the USD’s decline, the downside for the USD/CAD pair may be limited, as the Canadian Dollar (CAD), which is closely linked to commodity prices, faces pressure from falling crude oil prices. West Texas Intermediate (WTI) crude has dropped over 1%, trading around $62.80 per barrel.
Oil prices weakened following progress in nuclear talks between the US and Iran, which eased concerns over potential disruptions to oil supply from the Middle East. Iran’s foreign minister confirmed that both nations agreed on Saturday to begin drafting a framework for a potential nuclear deal, with US officials describing the discussions as showing “very good progress,” according to Reuters.
