- The USD/CAD is corrected about 1,3725 while the US dollar struggles to extend its rise.
- Operators reduce Fed dovish bets as the prices of products imported to the US have increased.
- Commercial tensions between the US and Canada have weighed over the Canadian dollar.
The USD/CAD torque lower 0.25% to about 1,3725 during the European trading session on Friday. The Lonie Par faces a slight sales pressure while the US dollar (USD) goes back after not being able to extend its two -week rally. The dollar index (DXY), which tracks the value of the dollar against six main currencies, is corrected about 98.30 from a maximum of more than three weeks around 99.00.
The US dollar falls while investors seek new clues about commercial conversations between the United States (USA) and the Eurozone. The head of Commerce of the European Union (EU), Maros Sefcovic, went to Washington on Wednesday for a new round of commercial conversations. Commercial negotiations between both economies deteriorated after US President Donald Trump imposed 30% tariffs on imports of the commercial block last weekend.
In the domestic sphere, the growing market expectations that the Federal Reserve (FED) will maintain interest rates in the current range of 4.25% -4.50% longer will continue to support the US dollar.
According to the CME Fedwatch tool, the probability that the FED cuts interest rates at the September meeting has been reduced to 58% since 70.4% seen a week ago. The operators reduced the Fed Dovish bets after the US consumer price index (IPC) for June showed that the prices of goods, mostly imported, increased.
Meanwhile, the Canadian dollar (CAD) quotes down between the perceived currencies and risk in the midst of commercial tensions between the US and Canada. During the weekend, President Trump imposed 30% tariffs on Canada imports, which are independent of sectoral taxes.
US Dollar – Frequently Questions
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values that overcome in new purchases. It is usually positive for the US dollar.
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.