- The USD/CAD wins traction until around 1,3855 in the first Asian session on Friday.
- Trump signed an order by increasing the tariff rate on Canada from 25% to 35%, said the White House.
- All eyes will be placed in the US US NFP report, which will be published later on Friday.
The USD/CAD pair advances around 1,3855 during the first Asian session on Friday. The US dollar (USD) is strengthened against the Canadian dollar (CAD) after US President Donald Trump increased the Canada tariff to 35%. The US non -agricultural payroll (NFP) for July will be the center of attention later on Friday.
The White House announced late on Thursday that Trump has signed an executive order by increasing the Canada tariff from 25% to 35%, with the highest scheduled tariff to enter into force on August 1, 2025. Previously, Trump criticized the announcement of the Canadian Prime Minister Mark Carney that Canada plans to recognize a Palestinian state, but said to the reporters that “it is not a decisive factor in commercial negotiations.
The dollar attracts some buyers in an immediate reaction to developments around US tariffs on Canada. The attention will be transferred to the publication of the highly anticipated US NFP report on Friday to obtain a new impulse. The US employment data for July could offer some clues about the conditions of the US labor market and the perspectives of interest rates.
On the other hand, the moderate position of the Bank of Canada (BOC) could limit the increase of the CAD. The Bock maintained its interest rate without changes in 2.75% on Wednesday, citing the resilience of the economy despite the current global commercial war caused by the USA. The governor of the BOC, TIFF Macklem, said after the policy meeting that the door remains open to lower the rates in the future if necessary. This could weigh on the CAD and create a tail wind for the short term.
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.