- The Canadian dollar fell to new minimum of two weeks against the US dollar on Wednesday.
- The feeling of the market is being beaten by the renewed tariff threats of the Trump administration.
- Despite the new cycle of Trump tariff bravates, the markets still incline towards expectations of a new setback.
The Canadian dollar (CAD) lost more peso on Wednesday, falling to its lowest offers against the US dollar (USD) in about two weeks, pushing the USD/Cad to the region of 1,3700. The feeling of the market is focusing on the middle while the Trump administration recycles its threats on additional tariffs to countries that have treated the US “unfairly” on trade. However, President Trump has a well -established history of threatening with import taxes much higher than he tends to apply, leaving a lot of space for investors to bet on another setback.
The figures of the purchasing managers (PMI) index of Canada’s Ivey improved in June, bouncing above the contraction level of 50.0 after a two -month drop in the added commercial expectations. The Canadian economy is still on an unstable base in general, and CAD operators will be looking towards the net contracting figures of Canada that will be published on Friday.
Daily summary of market movements: the slight risk aversion for tariff conversation presses CAD
- The Trump administration has revealed another series of countries that will face additional two -digit tariff levels on August 1 if the commercial agreements do not reach the Trump President’s desktop before that date.
- This adds to the two -digit reciprocal tariffs that will also enter into force on August 1 after being delayed 90 days in April and then another month just before the deadline of July 9.
- The ongoing tariff tensions with an inconsistent perspective have left investors and commercial operators in a precarious situation, since intermittent tariffs make the forecast of commercial conditions virtually impossible.
- In other markets, the last minutes of the Federal Reserve Meeting (FED) showed that those responsible for the FED policy bowed towards a lower inflation expectation at the last meeting of the Federal Open Market Committee (FOMC), however, that opinion was conditioned that there was no more tariff volatility of the Trump administration.
- Later this week, the Canadian economy is expected to not add new jobs during June, while the Canadian unemployment rate is expected to rise to 7.1%.
Prognosis of the price of the Canadian dollar
The continuous weakness of the CAD, or the strength of the USD, is ready to push the CAD to a new round of minimums. The USD/CAD is testing water just above the downward trend lines from peaks of several decades established in early 2025, and the flows against the trend could become a full -fledged reversion if the USD bulls continue to pushing the dollar against the weakened CAD.
USD/CAD DAILY GRAPH
Canadian dollar – frequent questions
The key factors that determine the contribution of the Canadian dollar (CAD) are the level of interest rates set by the Bank of Canada (BOC), the price of oil, the main export product of Canada, the health of its economy, inflation and commercial balance, which is the difference between the value of Canadian exports and that of its imports. Other factors are market confidence, that is, if investors bet on riskier assets (Risk-on) or seek safe assets (Risk-Off), being the positive risk-on CAD. As its largest commercial partner, the health of the US economy is also a key factor that influences the Canadian dollar.
The Canada Bank (BOC) exerts a significant influence on the Canadian dollar by setting the level of interest rates that banks can provide with each other. This influences the level of interest rates for everyone. The main objective of the BOC is to maintain inflation between 1% and 3% by adjusting interest rates to the loss. Relatively high interest rates are usually positive for CAD. The Bank of Canada can also use quantitative relaxation and hardening to influence credit conditions, being the first refusal for CAD and the second positive for CAD.
The price of oil is a key factor that influences the value of the Canadian dollar. Oil is the largest export in Canada, so the price of oil tends to have an immediate impact on the value of the CAD. Generally, if the price of oil rises, the CAD also rises, since the aggregate demand of the currency increases. The opposite occurs if the price of oil drops. The highest prices of oil also tend to give rise to a greater probability of a positive commercial balance, which also supports the CAD.
Although traditionally it has always been considered that inflation is a negative factor for a currency, since it reduces the value of money, the opposite has actually happened in modern times, with the relaxation of cross -border capital controls. Higher inflation usually leads to central banks to raise interest rates, which attracts more capital of world investors who are looking for a lucrative place to save their money. This increases the demand for the local currency, which in the case of Canada is the Canadian dollar.
The published macroeconomic data measure the health of the economy and can have an impact on the Canadian dollar. Indicators such as GDP, manufacturing and services PMIs, employment and consumer confidence surveys can influence the CAD direction. A strong economy is good for the Canadian dollar. Not only attracts more foreign investment, but it can encourage the Bank of Canada to raise interest rates, which translates into a stronger currency. However, if the economic data is weak, the CAD is likely to fall.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
