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• USD/CAD weakens to around 1.3910 in Wednesday’s early Asian session. 
• The US Dollar declines as caution reigns over the US economy. 
• A rise in Crude oil prices lifts the commodity-linked Loonie.

The USD/CAD pair extended its decline to near 1.3910 during the early Asian session on Wednesday. The US Dollar (USD) weakens against the Canadian Dollar (CAD) amid renewed concerns over the US economy. Traders will keep an eye on the speech from the Federal Reserve’s (Fed) Thomas I. Barkin later on Wednesday. 

The Greenback remains under selling pressure after last Friday’s downgrade of the US sovereign rating by Moody’s on deficit concerns. The downgrade underscores growing concerns over fiscal deterioration and tariff-induced distortions under US President Donald Trump.

“The Moody’s downgrade was the catalyst earlier, pushing yields higher and the dollar lower. Now yields have come off those highs and the dollar is still lower,” said Vassili Serebriakov, currency strategist at UBS in New York.

Meanwhile, none of the Fed officials has opened the door for cutting interest rates amid an ongoing economic slowdown in the US. On Monday, the Atlanta Fed’s Raphael Bostic said that he favors one cut in 2025.

Crude Oil prices rise after CNN cites unnamed US officials saying Israel is planning an attack on Iranian nuclear facilities. This, in turn, boosts the commodity-linked Loonie and creates a headwind for the pair. 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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