- The USD/CAD can be seen after the Trump announcement of a 35% tariff for the imported goods of Canada, effective on August 1.
- President Trump defended his decision by pointing out the retaliation tariffs of Canada and his lack of disposition to cooperate with Washington.
- Goolsbee of the Fed does not support the opinion that the Fed should cut interest rates to reduce the cost of government debt.
The USD/CAD is negotiated around 1,3700 during Friday’s Asian hours after recovering the recent losses recorded in the previous session. The torque can be seen while the Canadian dollar (CAD) faces challenges after the announcement of the US president Donald Trump of a 35% tariff for the imported goods of Canada, effective on August 1. Trump also declared that the European Union (EU) would receive a letter notifying them about the new tariff rates “today or tomorrow”.
President Trump justified his movement citing Canada’s retaliation tariffs and lack of cooperation with Washington, increasing the pressure on Ottawa to end a commercial agreement before the deadline. The new measures are added to the existing tariffs of 50% on Canadian steel and aluminum, being Canada the largest supplier of both metals to the United States (USA).
In addition, Trump revealed tariff demand letters on Wednesday, including a 50% rate on Brazil, a 30% rate over Algeria, Libya, Iraq and Sri Lanka, and a 20% rate on the philippines of the Philippines, which will enter into force in August, according to Bloomberg.
The US dollar (USD) extends its profits due to the evolution of monetary policy signals. The president of the Bank of the Federal Reserve of Chicago, Austan Goolsbee, said Thursday night that he does not support the arguments that the US Central Bank should cut the rates to make the cheapest government debt, the mandate is in jobs and prices.
The minutes of the Federal Open Market Committee (FOMC) of the June 17-18 meeting, published on Wednesday, indicated that those responsible for the policy largely maintained a waiting position and see regarding future decisions about interest rates.
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.