USD/CAD Surges Above 1.3700 as Strong Dollar and Trade Tensions Shake the Loonie
The USD/CAD currency pair jumped back above the key 1.3700 level in early Thursday trading, nearing a multi-week high. This move comes as the US dollar gains strength across the board and the Canadian dollar faces pressure from growing trade tensions and weak oil prices.
The US dollar remains strong thanks to fewer expectations of Fed rate cuts and improved market confidence after President Trump denied any plans to replace Fed Chair Jerome Powell. This helped the dollar regain momentum and attract bullish traders.
On the other hand, the Canadian dollar (often called the “Loonie”) is under pressure. Trump announced a 35% tariff on Canadian goods starting August 1 and warned of more if Canada retaliates. This raised fears of a trade war, which weighed heavily on the CAD. Recently, Canada had imposed a 50% tariff on US copper imports, adding to market uncertainty.
Crude oil prices, which usually support the CAD, are not offering much help either, further hurting the currency. The combination of a strong US dollar and a weak Canadian dollar is driving the USD/CAD higher.
Traders are now watching key US economic data like retail sales, jobless claims, and the Philly Fed index for the next potential move.
Impact:
The USD/CAD might continue rising if trade tensions grow or US economic data beats expectations. Any signs of relief in trade talks could slow the uptrend.