Loonie Falls as Trade Tensions with the US Escalate

2026-08-24 02:51 By Judith Sib-at 1 min. read

The Canadian dollar fell to around 1.37 per US dollar, retreating from a three-month high as the US-Canada trade war intensified following the collapse of negotiations.

President Donald Trump’s 50% tariffs on a range of Canadian goods took effect on Saturday after weeks of urgent talks broke down shortly before the deadline.

The new levies are expected to affect around 5% of Canada’s annual exports to the US, worth roughly $20 billion, covering products such as hockey sticks, agricultural products, wine, cement, clothing, furniture, cameras, and other consumer goods.

In response, Canadian Prime Minister Mark Carney said the country would impose retaliatory tariffs starting September 8.

Geopolitical tensions also kept investors cautious, with the US expected to announce fresh sanctions on Iran later in the day.

Meanwhile, markets are looking ahead to Federal Reserve Chair Kevin Warsh’s first Jackson Hole speech later this week for further clues about the outlook for US interest rates.



News Stream
Loonie Falls as Trade Tensions with the US Escalate
The Canadian dollar fell to around 1.37 per US dollar, retreating from a three-month high as the US-Canada trade war intensified following the collapse of negotiations. President Donald Trump’s 50% tariffs on a range of Canadian goods took effect on Saturday after weeks of urgent talks broke down shortly before the deadline. The new levies are expected to affect around 5% of Canada’s annual exports to the US, worth roughly $20 billion, covering products such as hockey sticks, agricultural products, wine, cement, clothing, furniture, cameras, and other consumer goods. In response, Canadian Prime Minister Mark Carney said the country would impose retaliatory tariffs starting September 8. Geopolitical tensions also kept investors cautious, with the US expected to announce fresh sanctions on Iran later in the day. Meanwhile, markets are looking ahead to Federal Reserve Chair Kevin Warsh’s first Jackson Hole speech later this week for further clues about the outlook for US interest rates.
2026-08-24
Canadian Dollar Nears Three-Month High
The Canadian dollar strengthened to 1.38 per USD in late August, nearing a three-month high, supported by a weaker US dollar and elevated crude oil prices. The loonie’s gains were primarily driven by renewed pressure on the greenback as investors reassessed the Federal Reserve’s policy path. Recent US economic data, including softer inflation readings, fueled expectations that the Fed could begin cutting interest rates sooner than previously anticipated, weighing on the dollar and supporting commodity-linked currencies. Meanwhile, crude oil prices remained elevated near multi-month highs, benefiting the Canadian currency as higher energy prices improve the country’s terms of trade. On the trade front, Canadian and US negotiators are set to meet in an effort to finalize a deal that could ease months of tariffs and counter-tariffs. Canadian bond yields rose across the curve, tracking higher US Treasury yields.
2026-08-21
Canadian Dollar Gains for Third Straight Week
The Canadian dollar strengthened to 1.39 per USD, posting a third consecutive weekly gain as yield spreads narrowed. Domestic factory data supported the recent narrowing in the gap between US and Canadian bond yields. The spread between Canada’s 2-year yield and the US equivalent has narrowed by about 17 basis points this month. Canadian factory sales rose 0.1% in June from May, marking a fifth consecutive monthly gain, while sales volumes increased 1.2%. Meanwhile, US retail sales unexpectedly fell in July by the most in more than a year. Recent data also showed a stronger Canadian labor market and weaker US employment, reducing expectations for a Federal Reserve rate hike this year while raising the prospect of a BoC hike if energy prices remain elevated. Canada’s economy is estimated to have expanded at an annualized 3.4% in the second quarter, well above the Bank of Canada’s 2.5% forecast.
2026-08-14