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Canadian dollar steadies near 70 cents as oil and GDP in focus
Canadian GDP rose 0.5% month on month in April, while Canadian bond yields climbed over the week before easing, leaving rate expectations largely unchanged.
A holiday-shortened week still brought notable market moves, with the Canadian dollar holding around 70 U.S. cents even as it has been falling since early May. Action Forex attributed the currency pressure to hawkish messaging from the U.S. central bank, while noting that the oil slide has supported inflation expectations.
Oil fell further during the week and has dropped since early June, linked to hopes of a U.S.-Iran peace deal and improved traffic through the Strait of Hormuz. The outlet said the move should show up in the June CPI print, though it also warned there could be upside later given inventory drawdowns during the conflict and the ramp-up expected in the summer driving season.
Canada also saw a domestic data lift, with monthly GDP rising 0.5% month on month in April, the largest increase since July 2025. Action Forex said the gain should help calm recession chatter, and that incorporating the latest guidance puts Canada on track for above 2% annualized growth in the second quarter, stronger than what the Bank of Canada projected in April.
On trade policy, a July 1 deadline to extend the CUSMA agreement for another 16 years passed, with the outcome well telegraphed and the status quo maintained. Most Canadian exports to the U.S. remain tariff-free, but heavy levies on sectors including steel, aluminum, and autos are still in place, with annual reviews ahead. The outlet said the GDP rebound does not materially change its view on rates.