The US tariffs have had a mixed but generally weakening effect on the Canadian dollar (CAD) , influencing the USD/CAD exchange rate
Current Exchange Rate Context
As of July 11, 2025, the USD/CAD rate is around 1.37-1.3698 , with the US dollar strengthening and the Canadian dollar weakening about 0.7% over the past month.
Impact of US Tariffs on CAD Strength
Trade Exposure:
Canada is highly integrated with the US economy, with over 70% of Canadian exports going to the US. Tariffs on Canadian goods or retaliatory tariffs can reduce trade volumes and economic growth in Canada, weakening the CAD.
Market Sentiment and Risk:
Tariff uncertainties create volatility and risk aversion, often benefiting the safe-haven USD at the expense of commodity-linked currencies like CAD.
Commodity Prices:
Tariffs can disrupt global supply chains and commodity demand. Since Canada is a major oil exporter, any negative impact on oil prices due to trade tensions tends to weaken the CAD.
Interest Rate and Economic Outlook:
Trade tensions may lead to cautious monetary policy by the Bank of Canada, limiting rate hikes or prompting cuts, which can reduce the interest rate differential versus the US and weigh on CAD
2. Interest Rates
Bank of Canada (BoC) Overnight Target Rate: 2.75% (held steady as of July 9, 2025).
Canadian government 10 year bond yield is 3.419%
US Federal Reserve Rate: Around 4.5% (market consensus for mid-2025).
United states government 10 year bond yield is 4.38%-4.4%
The interest rate differential between the US and Canada remains significant, favoring USD, which supports USD strength against CAD.
US 10-Year Treasury Yield: Generally higher than Canadian yields, around 4.38%–4.4% (market consensus), maintaining a yield advantage for USD assets.
4. Impact on USD/CAD
The higher US interest rates and bond yields relative to Canada make USD-denominated assets more attractive, contributing to the USD’s strength against CAD.
Conclusion
The US tariff policies in 2025 have contributed to a weaker Canadian dollar by increasing economic uncertainty, disrupting trade, and pressuring commodity prices. This has supported the US dollar’s recent strength against CAD, pushing the USD/CAD rate toward the higher .
#usdcad #cad #usd
Current Exchange Rate Context
As of July 11, 2025, the USD/CAD rate is around 1.37-1.3698 , with the US dollar strengthening and the Canadian dollar weakening about 0.7% over the past month.
Impact of US Tariffs on CAD Strength
Trade Exposure:
Canada is highly integrated with the US economy, with over 70% of Canadian exports going to the US. Tariffs on Canadian goods or retaliatory tariffs can reduce trade volumes and economic growth in Canada, weakening the CAD.
Market Sentiment and Risk:
Tariff uncertainties create volatility and risk aversion, often benefiting the safe-haven USD at the expense of commodity-linked currencies like CAD.
Commodity Prices:
Tariffs can disrupt global supply chains and commodity demand. Since Canada is a major oil exporter, any negative impact on oil prices due to trade tensions tends to weaken the CAD.
Interest Rate and Economic Outlook:
Trade tensions may lead to cautious monetary policy by the Bank of Canada, limiting rate hikes or prompting cuts, which can reduce the interest rate differential versus the US and weigh on CAD
2. Interest Rates
Bank of Canada (BoC) Overnight Target Rate: 2.75% (held steady as of July 9, 2025).
Canadian government 10 year bond yield is 3.419%
US Federal Reserve Rate: Around 4.5% (market consensus for mid-2025).
United states government 10 year bond yield is 4.38%-4.4%
The interest rate differential between the US and Canada remains significant, favoring USD, which supports USD strength against CAD.
US 10-Year Treasury Yield: Generally higher than Canadian yields, around 4.38%–4.4% (market consensus), maintaining a yield advantage for USD assets.
4. Impact on USD/CAD
The higher US interest rates and bond yields relative to Canada make USD-denominated assets more attractive, contributing to the USD’s strength against CAD.
Conclusion
The US tariff policies in 2025 have contributed to a weaker Canadian dollar by increasing economic uncertainty, disrupting trade, and pressuring commodity prices. This has supported the US dollar’s recent strength against CAD, pushing the USD/CAD rate toward the higher .
#usdcad #cad #usd
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.