During European trading hours on Tuesday, the USD/CAD pair approached the 1.3760 mark, with the Loonie pair gaining ground as the US Dollar (USD) strengthened. This rise in the USD can be attributed to improved trade relations between the European Union (EU) and the United States (US).
The US Dollar Index (DXY), which measures the USD’s value against six major currencies, saw an increase to 99.35 after hitting a monthly low of 98.70 on Monday. EU officials have urged companies within the bloc to share details of their investment plans in the US, indicating attempts by the continent to speed up negotiations for a trade deal with the US.
Trade tensions between the EU and US calmed on Monday, and there is now a growing belief that both economies will reach a bilateral deal. These expectations were further reinforced by comments from European Trade Commissioner Maros Sefcovic, who stated that the EU Commission remains fully committed to working towards a deal with the US and that both parties are in constant communication.
Despite underperforming against the US Dollar, the Canadian Dollar (CAD) traded higher against other major currencies during European trading hours on Tuesday. This week, the Q1 and March Gross Domestic Product (GDP) data, set to be released on Friday, will be a key factor in determining the Loonie’s performance. The Canadian economy is expected to have grown at a slower pace of 1.6% on an annualized basis, compared to the previously reported 2.6%. Investors will also be closely watching the Bank of Canada’s (BoC) interest rate decision next week.