USD/CAD Subdued Near 1.3600 as Risk Sentiment Improves

USD/CAD Drifts Near 1.3600 as US Trade Shift and Fed Uncertainty Weigh on Dollar

The USD/CAD currency pair trades near 1.3600 during early European trading on Tuesday, holding ground after previous losses. Risk appetite improves following news that US trade officials are shifting focus toward phased agreements, softening their original all-encompassing tariff strategy. This is helping risk-sensitive assets like the Canadian Dollar (CAD) gain ground.

US-Canada Trade Friction in Focus

Markets also responded to a statement from White House advisor Kevin Hassett, who said that the US will initiate trade negotiations only once Canada removes its digital services tax targeting American companies. This tax dispute adds a layer of tension to the bilateral economic relationship.

Fed Outlook Unclear Ahead of Labor Data

Investor sentiment remains cautious ahead of the upcoming US labor market reports, which are expected to offer more clarity on the Federal Reserve’s July rate decision. In the meantime, concerns over the US fiscal outlook—especially a proposed spending package that may raise the deficit by $3.3 trillion—are keeping USD bulls at bay.

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