Canadian Dollar: Trade tensions and US CPI in focus – TD Securities

TD Securities notes that a data-light week in Canada will keep attention on CAN-US trade tensions as Canadian countertariffs take effect. The US has already signalled higher tariffs on Canadian vehicles from January 1. US CPI and the ECB meeting are highlighted as key drivers for risk sentiment, with implications for the Canadian Dollar through trade and rate expectations.

CAN-US tariffs dominate near-term risks

"There is virtually no domestic economic data over the coming week outside the weekly Bloomberg Nanos Confidence measure on Tuesday which should keep the focus on North American trade tensions after Canadian countertariffs come into effect on Tuesday."

"The US has already pledged to retaliate with higher tariffs on Canadian vehicles on January 1st, but we will be watching for any new threats of retaliation over the coming week."

"US CPI will provide another key driver for risk sentiment on Friday where markets will be looking for any signs of renewed price pressures ahead of the September FOMC meeting, while Thursday's ECB decision rounds out the key events."