U.S. Tariffs Rattle Markets as Canadian Dollar Falls to One-Week Low
Latest news on WhatsApp أجدد الأخبار على واتسابThe Canadian dollar weakened against its U.S. counterpart, falling to its lowest level in a week as new American tariffs revived concerns over the future of trade between Canada and the United States.
The loonie slipped about 0.2% to trade near C$1.4104 per U.S. dollar, equivalent to roughly 70.90 U.S. cents, marking its weakest level since July 14.
The decline followed Washington’s announcement of new 50% tariffs on a broad range of Canadian products, adding pressure to the already uncertain trade relationship between the two countries.
The proposed measures are expected to affect several categories of Canadian exports, while major sectors such as energy, potash and critical minerals remain exempt.
Currency analysts said the loonie’s weakness was not driven by trade concerns alone. A widening gap between Canadian and U.S. bond yields also weighed on the currency, as investors reduced expectations for interest-rate increases by the Bank of Canada.
Markets lowered their expectations for additional Canadian rate hikes by the end of the year, reflecting concerns that higher tariffs could slow economic growth and limit the central bank’s ability to tighten monetary policy.
The spread between Canadian and U.S. two-year government bond yields also widened, making U.S. assets more attractive to investors and strengthening demand for the American dollar.
The U.S. currency received further support from safe-haven demand amid rising geopolitical tensions and concerns that inflationary pressures could remain elevated.
Oil prices moved higher, offering some support to the Canadian dollar because Canada is a major energy exporter. However, the increase was not enough to reverse the currency’s broader decline.
A weaker Canadian dollar can raise the cost of travel, online shopping and purchases priced in U.S. currency. It can also make imported goods more expensive for Canadian consumers.
Canadian exporters may benefit from a lower exchange rate because their products become cheaper for international buyers. However, steep tariffs could reduce that advantage by making Canadian goods more expensive in the U.S. market.
The latest currency movement highlights the growing economic risks facing Canada as trade tensions with its largest commercial partner continue to influence investment, inflation expectations and monetary policy.
