Canadian Dollar backslides further as risk aversion bolsters the Greenback further

• The Canadian Dollar fell to fresh two-week lows against the US Dollar on Wednesday.
• Market sentiment is getting battered by renewed tariff threats from the Trump administration.
• Despite the fresh cycle of Trump tariff bluster, markets are still leaning into expectations of another walkback.

The Canadian Dollar (CAD) shed further weight on Wednesday, falling to its lowest bids against the US Dollar (USD) in around two weeks, pushing the USD/CAD pair back up into the 1.3700 region. Market sentiment is drawing into the middle as the Trump administration recycles its threats about additional tariffs on countries that have been treating the US "unfairly" on trade. However, President Trump has a well-established track record of threatening far steeper import taxes than he tends to deliver, leaving plenty of room for investors to bank on another walkback.

Canadian Ivey Purchasing Managers Index (PMI) figures improved in June, bouncing back above the 50.0 contraction level following a two-month decline in aggregated business expectations. The Canadian economy is still on rocky footing overall, and CAD traders will be looking ahead to this week's Canadian net hiring figures due on Friday.

Daily digest market movers: Light risk aversion on tariff talk squeezes Loonie lower

• The Trump administration has unveiled another raft of countries that will be facing additional double-digit tariff levels on August 1 if trade deals aren't delivered to President Trump's desk before then.
• This is in addition to double-digit reciprocal tariffs that are also due to come into effect on August 1 after being delayed 90 days in April and then another month just before the July 9 deadline.
• Ongoing tariff tensions with an inconsistent outlook have hung both investors and business operators out to dry as on-again, off-again tariffs make trade conditions forecasting functionally impossible.
• Elsewhere in markets, the Federal Reserve's (Fed) latest Meeting Minutes showed Fed policymakers were leaning toward lower inflation expectation at the Federal Open Market Committee's (FOMC) last rate call meeting, however that view was contingent on no further tariff volatility from the Trump administration.
• Coming up later this week, the Canadian economy is expected to add no new jobs through June, while the Canadian Unemployment Rate is expected to tick up to 7.1%.

Canadian Dollar price forecast

Ongoing CAD weakness, or USD strength, is poised to push the Loonie into a fresh bout of new lows. USD/CAD is testing waters just above ongoing downward trendlines from multi-decade peaks set earlier in 2025, and counter-trend flows could roll over into a full-blown reversal if USD bulls continue to push up the Greenback against the weakening CAD.

USD/CAD daily chart