Canadian dollar slips as investors await tariff deal with US

The Canadian dollar experienced a decline against the US dollar on Tuesday as investors awaited negotiations between Canada and the United States to prevent new tariffs from becoming effective. The loonie decreased by 0.2% to trade at 1.39 per US dollar, or 71.94 US cents. This marks a shift from Monday's session, where the currency reached its strongest level in over two months at 1.3842.

Prime Minister Mark Carney engaged in talks with US President Donald Trump on Monday, as confirmed by Carney's office. Canada is striving to secure a last-minute deal to avert the implementation of 50% tariffs scheduled to start at midnight on Wednesday. These proposed tariffs would impact around $20 billion worth of Canadian imports.

Strategists at Monex Europe suggested that a successful agreement might bring the USD-CAD exchange rate closer to 1.37. Conversely, they noted that heightened tensions could cause the rate to surge back above 1.40 in the days ahead. West Texas Intermediate oil futures increased by 0.6% to $85.03 per barrel as the probability of a Middle East peace deal diminished, heightening concerns over ongoing energy supply disruptions.

Oil constitutes a significant portion of Canada's exports. Canadian home sales rose for the fourth consecutive month in July, growing by 0.5% from the previous month, while home prices also exhibited an uptick. Bond yields in Canada retreated from multi-year peaks as the tariff discussions persisted.