USD/CAD trades in negative territory around 1.3715 in Tuesday’s early Asian session.
US May ISM Manufacturing PMI eased to 48.5 in May, weaker than expected.
Crude Oil prices rose after the report that the OPEC+ kept output hikes unchanged, supporting the commodity-linked Loonie.
The USD/CAD pair remains on the defensive near 1.3715 during the early Asian session on Tuesday. The US Dollar Index (DXY) softens to fresh seven-week lows amid jitters over the health of the US economy. The JOLTs Job Openings will be published later on Tuesday.
The Greenback edges lower as traders remain concerned over the ongoing tariff uncertainty and its potential to hurt growth in the US economy. US President Donald Trump announced on Friday that he plans to double import tariffs on steel and aluminum, effective Wednesday. This put pressure on global steel producers and intensified trade war. "Any time we see a resurgence in tariff concerns, everyone begins to pile back into the 'sell America' trade once more," said Michael Brown, market analyst at online broker Pepperstone in London.
Additionally, the US manufacturing sector has continued a trend of contraction for three consecutive months. This downbeat US economic data contributes to the USD’s downside. Data released from the Institute for Supply Management (ISM) on Monday showed that the US Manufacturing Purchasing Managers Index (PMI) eased to 48.5 in May from 48.7 in April. This figure came in weaker than the expectation of 49.5.
Later on Friday, all eyes will be on the US employment report for May. The US Nonfarm Payrolls (NFP) is expected to show job growth of 130K in May, while the Unemployment Rate is projected to remain steady at 4.2% in the same report period. In case of a stronger-than-expected outcome, this could lift the Greenback and help limit the pair’s losses.
Meanwhile, a rise in Crude Oil prices after the report that the OPEC+ kept output hikes unchanged, raising its production by the expected 411K barrels per day (bpd) in July, might underpin the commodity-linked Loonie. It’s worth noting that Canada is the largest oil exporter to the US, and higher crude oil prices tend to have a positive impact on the CAD value.
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