HSBC Global Research views USD/CAD as largely driven by the broader Dollar trend, with the pair trading slightly below levels implied by rate spreads, reflecting Canadian Dollar resilience. Elevated Oil prices linked to Middle East tensions are supportive. With tariff uncertainty easing and a potentially less aggressive US trade stance into midterms, a sharp USD/CAD rise is seen as unlikely.

Loonie resilient as oil and policy help

"USD-CAD is primarily driven by the broad USD trend and is currently trading just below levels implied by interest rate differentials, reflecting CAD resilience."

"Elevated oil prices, driven by Middle East tensions, continue to support the CAD."

"Although tariff uncertainty could impact business confidence, recent improvements are notable."

"With a potentially less aggressive US trade stance ahead of the mid-term elections, a sharp USD-CAD increase seems unlikely."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)