Canadian Dollar snaps lower after Trump pulls the plug on trade talks with Canada

• The Canadian Dollar sharply pared back near-term gains on Friday.
• US President Donald Trump has announced that his team is ending all trade talks with Canada.
• Canadian GDP growth contracted in April, adding further downside pressure to Loonie flows.

The Canadian Dollar (CAD) backslid on Friday, falling back on a combination of weakening Canadian Gross Domestic Product (GDP) growth metrics and fresh trade tensions with US President Donald Trump. The Trump team appears to be pulling up stakes and abandoning the trade negotiation table entirely, with Donald Trump announcing that he was taking his ball and going home in a social media post Friday afternoon.

Canadian GDP growth contracted in April, knocking Loonie sentiment slightly lower. Between easing inflation data and declining growth prospects, investor bets of a fresh batch of rate cuts from the Bank of Canada (BoC) are on the rise.

Daily digest market movers: Canadian Dollar slumps amid slowing growth, fresh tariff threats from Trump

• The Canadian Dollar pared back near-term gains, falling against the Greenback and bolstering the USD/CAD pair into the 1.3750 level on Friday.
• Canadian GDP contracted by 0.1% in May. The growth print carries little weight independently, but it does add a little bit more confidence to traders betting on a return to rate cuts from the BoC.
• US President Donald Trump proclaimed via social media post on Friday that he would be pulling the US out of trade talks with Canada entirely.
• Donald Trump misattributed dairy tariff levels that are already covered under his own bespoke USMCA trade deal that he negotiated during his first term, and stated that he would be announcing more tariffs on Canada in the next seven days.
• President Trump appears to be frustrated that Canada is going ahead with closing a predatory taxation loophole that allows US tech companies to sell their products in Canadian markets tax-free. The new fee coming into effect on cross-border tech services has been years in the making, but the Trump administration has waited until the eleventh hour to pull up all stakes.

Canadian Dollar price forecast

A fresh bullish pivot in the USD/CAD pair, bolstered by a fresh bout of Loonie weakness, has pushed the Loonie-Dollar pairing back into a descending trendline drawn from multi-decade highs posted in January. Overall trend momentum is still tilted in favor of the Canadian Dollar as the US Dollar buckles under the weight of global selling pressure, but near-term shocks to CAD stability could see USD/CAD knock back into the high side and challenge the 200-day Exponential Moving Average (EMA) near 1.3950.

USD/CAD daily chart