USD/CAD Dips Below 1.3700 as Dollar Pulls Back Ahead of US-China Trade Talks

USD/CAD Drops to 1.3680 as Dollar Retreats Before US-China Trade Talks

The USD/CAD pair is under modest pressure in Monday’s Asian session, trading near 1.3680, as the US Dollar retreats following a strong showing last Friday. The pullback is attributed to investor caution ahead of new US-China trade negotiations and a calmer outlook on North American tariffs.

US Dollar Pulls Back After Strong Jobs-Driven Rally

On Friday, the US Dollar surged on the back of better-than-expected jobs data, but is now easing. The USD/CAD pair is giving up some of those gains, despite the Federal Reserve rate-hold outlook being reinforced.

Key US data from May:

• Nonfarm Payrolls (NFP): +139,000 (vs. 130,000 expected)
• Unemployment Rate: 4.2% (unchanged)
• Average Hourly Earnings: 3.9% (unchanged)

The upbeat labor data supports the Fed’s cautious stance to maintain current interest rates, but traders are now pivoting toward global trade developments for directional cues.

US-China Trade Talks Return to Spotlight

The US-China trade conflict enters a potential de-escalation phase as Treasury Secretary Scott Bessent and other US officials are set to meet Chinese delegates in London on Monday. The meeting follows a conversation between President Donald Trump and President Xi Jinping, where both agreed to restart negotiations aimed at ending the protracted trade war.

The prospect of trade progress has tempered market nerves, reducing safe-haven demand for the USD and lifting risk-sensitive currencies, including the CAD.

🇨🇦 Tariff War Fears Easing

The Canadian Dollar is also benefiting from a less aggressive stance on US-Canada tariffs, as the global tone improves. The USD/CAD downtrend could deepen if trade negotiations produce favorable headlines.

Related Content on Tredu.com:

• What Strong NFP Means for USD/CAD in June 2025
• US-China Trade Talks: What Markets Should Watch
• Canadian Dollar Outlook: Is Tariff Pressure Fading?

Key Takeaways:

• USD/CAD trades near 1.3680, slipping below 1.3700 as the Dollar weakens.
• US job data was strong, supporting the case for a Fed rate hold.
• Traders shift attention to US-China trade talks and tariff de-escalation.
• Scott Bessent’s meeting with Chinese officials could reshape short-term market sentiment.
• Canadian Dollar shows resilience amid improved global risk tone.