- The Canadian dollar stumbled on Friday while fears persist for tariffs.
- Canadian labor data exceeded forecasts, strengthening CAD.
- New tariff threats of Donald Trump have limited the profits of the CAD.
The Canadian dollar (CAD) tested lower levels against the US dollar (USD) on Friday, losing peso despite the fact that Canadian work data figures exceeded market forecasts in a considerable margin, dissipating concerns about an economic recess interest.
Adding more fuel to risk aversion fires that his administration began this week, US President Donald Trump has announced another round of tariff threats against Canada if the country does not deliver a satisfactory commercial agreement before the deadline of August 1. The new tariffs will enter into force on the same day that “reciprocal” tariffs, announced in April, are scheduled to start after being delayed twice by Trump himself.
Daily summary of market movements: the body wins from the reduced expectations of BOC rates cuts, but commercial risks remain in the foreground
- The Canadian dollar briefly tested new minimum of two weeks against the US dollar despite the best Canadian labor data of what was expected.
- The new tariff additions of President Trump about Canadian goods are strangling the feeling of the market while commercial tensions weigh on investors and commercial operators.
- Canada added 83.1k new net jobs in June, well above the expected 0..
- The Canadian unemployment rate also fell to 6.9% compared to the increased increase to 7.1%.
- With Canadian employment data, exceeding expectations, fees markets are valuing less than one in five possibilities of a quarter -pointed to Boc’s feature later this month.
- Donald Trump says that Canadian goods could face an additional import tax of 35% as of August 1 if Canada does not conform to what Trump wants in commercial terms, which seems to be an objective in constant movement.
Prognosis of the price of the Canadian dollar
The Canadian dollar continues to struggle to maintain short -term profits, and the USD/CAD torque is caught in a growing consolidation zone just below the level of 1,3700. The continuous weakness of the CAD, or the strength of the USD, is ready to push the Canadian dollar to a new round of minimums. The USD/CAD is testing Aguas just above the ongoing descending lines from the maximum of several decades established in early 2025, and the flows against the trend could become a full -fledged reversion if the bulls of the USD 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.
