- The USD/CAD remains vulnerable as the markets digest the last round of tariff advertisements and stagnant commercial conversations between the US and Canada.
- The USD/CAD is approaching 1,3700 while operators weigh the copper tariffs and commercial negotiations.
- The Canadian dollar is cautious while Canada seeks to improve commerce with partners beyond the United States.
The Canadian dollar (CAD) stabilizes against the US dollar (USD) on Thursday despite the growing commercial pressures of the United States.
At the time of writing, the USD/CAD is quoted about 1,3700, where it is testing a key technical resistance after the Trump administration announced a 50% tariff on copper and increased the possibility of broader restrictions on Canadian exports.
The strong dependence of Canada in the US for trade leaves the Canadian dollar vulnerable to high geopolitical and economic risks before the renewed bilateral conversations at the end of this month.
With the United States reaffirming its ‘reciprocal tariffs’ policies, Canada faces greater exposure to trade -related interruptions.
According to the United Nations Comtrade database, Canada exported more than 435,000 million dollars to the US in 2024, which represents approximately 76% of its total exports. This strong dependence makes the Canadian economy highly sensitive to any deterioration in bilateral commercial relations.
In response, Canada’s Foreign Minister Anita Anand confirmed that the government is intensifying commercial diversification and pursuing a free trade agreement with the Association of Nations of Southeast Asia (ASEAN). In an interview with Reuters, he acknowledged that conversations with the US will resume on July 21, after weeks of stagnant progress. “Our commercial negotiators are involved in complex commercial negotiations to ensure that Canada’s interests occur in the best possible way,” Anand told Reuters.
Despite tensions, the CAD remains relatively stable. Market participants attribute this to the continuous strength in energy prices and a broader global demand for hard assets.
Technical analysis: the USD/CAD pauses above the resistance of the previous trend line, converted into support
The USD/CAD is currently quoted near the psychological level of 1,3700, having bounced from the minimum of July 1,3556. The price action is challenging the line of descending trend that has remained intact since April, with the torque testing about 78.6% of the fibonacci setback of the upward trend from September to February in 1,3713. With the simple mobile average (SMA) of 50 days, remaining in 1,3750, a clear breakdown above could lead to the maximum of June in 1,3823.
However, the inability to stay above 1,3700 and a movement below the 20 -day SMA level of 1,3661 could pave the way for a new test of the minimum of June about 1,3540.
Meanwhile, the relative force index (RSI) is currently around 51, reflecting a neutral impulse.
Tariffs – Frequently Questions
Although tariffs and taxes generate government income to finance public goods and services, they have several distinctions. Tariffs are paid in advance in the entrance port, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and companies, while tariffs are paid by importers.
There are two schools of thought among economists regarding the use of tariffs. While some argue that tariffs are necessary to protect national industries and address commercial imbalances, others see them as a harmful tool that could potentially increase long -term prices and bring to a harmful commercial war by promoting reciprocal tariffs.
During the election campaign for the presidential elections of November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy. In 2024, Mexico, China and Canada represented 42% of the total US imports in this period, Mexico stood out as the main exporter with 466.6 billion dollars, according to the US Census Office, therefore, Trump wants to focus on these three nations by imposing tariffs. It also plans to use the income generated through tariffs to reduce personal income taxes.
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.
