The Canadian dollar recovers as the solid employment data compensate for fears for Trump’s tariffs

• The Canadian dollar (CAD) rebounded after reaching a minimum of two weeks, following optimistic data from the national labor market.
• Canada added 83,100 jobs in June, well above expectations, while the unemployment rate fell to 6.9%.
• Trump points to Canada with a 35% tariff as of August 1, citing concerns for fentanyl and commercial imbalances.
• Canadian Prime Minister Mark Carney defended Ottawa’s position and promised to protect Canadian workers.

The Canadian dollar (CAD) recovers land against the US dollar (USD) on Friday, marking a minimum of two weeks during the early Asian negotiation session after the US president, Donald Trump, announced a strong 35% tariff on Canadian imports, which will enter into force on August 1.

Although the initial reaction caused a strong sale of the Loonie, with the USD/CAD shooting at a daily maximum of 1,3730. However, the PAR has retraced since then, negotiating around 1,3675 during the American session, since the Canadian dollar finds support in stronger national labor market data than expected.

The Canada labor market presented a solid surprise upwards in June, providing new support for the Canadian dollar after a turbulent start of the day. Statistics Canada reported Friday that the unemployment rate fell to 6.9%, challenging market expectations of an increase to 7.1%. The net employment variation shot at 83,100, a strong acceleration with respect to the modest profit of May 8,800 and well above the forecasts.

The participation rate of the workforce also increased slightly to 65.4% from 65.3%, pointing out a slight increase in the commitment of the workforce. However, average wages per hour were softened at 3.2% year -on -year, lowering 3.5% of the previous month, which points to a cooling in inflationary pressures driven by wages.

In the Commercial Front, the aggressive measures announced by President Trump have revived the fears of a renewed commercial war, particularly since they point to a close partner of the United States-Canadá Agreement (USMCA). In an official letter shared through its Truth Social platform, Trump justified the 35% tariff accusing Canada of not curbing fentanyl traffic and implementing “unfair commercial barriers” on US exports of dairy and agricultural products. He affirmed that the measure was necessary to “rebalance” the trade deficit of 63,000 million dollars with Canada and protect US workers, farmers and manufacturers.

Trump warned that any OTTAWA retaliation action would be answered with even higher tariffs, pointing out a possible volatile and prolonged interruption in commercial relations between the US. UU. And Canada. Notably, the new tariffs will apply to a wide range of Canadian goods not protected under the terms of the USMCA. In his letter to the Canadian Prime Minister Mark Carney, Trump also emphasized that Canadian companies that relocate operations in the US. UU. They would receive an accelerated regulatory treatment. “We will do our best to obtain approvals quickly, in a professional and routine way – in other words, in a matter of weeks,” he wrote.

In response, Canadian Prime Minister Mark Carney defended the commercial policies of Canada and efforts to combat illicit drug trafficking. In an X publication, Carney declared: “Throughout the current trade negotiations with the United States, the Canadian government has firmly defended our workers and companies. We will continue to do so while we work towards the new deadline of August 1. His comments reflect Ottawa’s firm position against what he considers unjustified protectionist measures, reinforcing his commitment to safeguard national interests amid the growing Washington pressure.