HG MARKETS:

The USD/CAD pair is trading slightly near the 1.3670 level during Thursday’s early European session, as the US Dollar weakens against the Canadian Dollar. Ongoing uncertainty surrounding US economic policies, along with renewed concerns over possible tariff hikes, is weighing on the Greenback. Meanwhile, attention is shifting toward upcoming economic data, with Canada’s Gross Domestic Product (GDP) and the US Producer Price Index (PPI) reports due on Friday.

On Wednesday, US Trade Representative Jamieson Greer stated that Donald Trump intends to raise tariff rates to 15% or higher for several countries in the coming days. However, this authority would only last for 150 days unless extended by Congress. These remarks have added to market uncertainty and weakened confidence in the US Dollar.

At the same time, persistent geopolitical tensions are helping support crude oil prices, which in turn benefit the Canadian Dollar. As a major oil-exporting nation, Canada typically sees its currency strengthen when oil prices rise, given the strong link between energy exports and economic performance.

Market participants are also keeping a close watch on developments surrounding the US-Iran nuclear negotiations. Officials from both countries are scheduled to meet in Geneva on Thursday for a third round of indirect talks, which could influence oil market sentiment and impact the CAD.

Looking ahead, the focus will shift to the US January PPI report on Friday. Economists expect producer prices to rise by 0.3% month-on-month, easing from December’s 0.5% increase. On an annual basis, PPI is projected to climb 2.6%, down from the previous 3.0%. A stronger-than-expected reading could reduce expectations of near-term interest rate cuts and provide support to the US Dollar against the Canadian Dollar.