Canadian dollar drifts higher above 1.3650 on tariff uncertainty, higher crude oil-FX

Canadian dollar drifts higher above 1.3650 on tariff uncertainty, higher crude oil-FX

Canadian Dollar Gains Ground Amid Tariff Uncertainty and Rising Crude Oil Prices

The Canadian dollar (CAD) edged higher on February 22, 2026, with the USD/CAD pair drifting to 1.3665 during Asian trading hours, driven by escalating U.S. tariff uncertainty and a rebound in crude oil prices according to FXStreet analysis. The Loonie's performance reflects a complex interplay of trade policy risks, energy market dynamics, and broader U.S. dollar (USD) weakness.

U.S. President Donald Trump's announcement of a blanket 15% global tariff on imports has intensified market jitters, undermining the USD and indirectly supporting the CAD as Mitrade reports. While the U.S. Supreme Court recently invalidated Trump's tariffs under the International Emergency Economic Powers Act (IEEPA), economists note that most Canadian exports were already exempt from these measures, limiting the ruling's immediate impact on bilateral trade according to FXStreet analysis. However, Trump's subsequent imposition of broad tariffs has reintroduced uncertainty, with traders closely monitoring the U.S. Producer Price Index (PPI) report for January, scheduled for release later in the week according to FXStreet analysis.

Crude oil prices, a critical driver of the CAD, have also provided a tailwind. Canada's status as a major oil exporter means higher energy prices typically boost demand for the Loonie according to FXStreet analysis. Persistent geopolitical risks, including Trump's threats of military action against Iran, have further elevated oil prices, reinforcing CAD strength as Mitrade reports. Analysts highlight that a positive trade balance, often linked to elevated oil exports, could amplify the currency's gains.

The Bank of Canada's monetary policy and inflation trends also remain influential. While the central bank aims to maintain inflation within 1-3%, higher inflation can indirectly support the CAD by prompting interest rate hikes, which attract capital inflows according to FXStreet analysis. However, cross-border trade policy developments—particularly under the Canada-U.S.-Mexico Agreement (CUSMA)—introduce volatility, with upcoming negotiations in Geneva adding to near-term uncertainty according to Morningstar analysis.

Looking ahead, the CAD's trajectory will depend on the resolution of U.S. tariff policies, oil price trends, and divergences in U.S. and Canadian monetary policy. For now, the Loonie's resilience underscores its sensitivity to both commodity markets and global risk sentiment according to Morningstar analysis.

(https://www.mitrade.com/au/insights/news/live-news/article-1-1495197-20260223): Mitrade Insights
(https://www.fxstreet.com/news/canadian-dollar-drifts-higher-above-13650-on-tariff-uncertainty-higher-crude-oil-202602230244): FXStreet
(https://global.morningstar.com/en-ca/markets/can-canadian-dollar-keep-rising-against-us-dollar): Morningstar