Canadian Dollar tests low side despite upswing in Canadian labor data

• The Canadian Dollar stumbled back on Friday as tariff fears remain.
• Canadian labor data overshot forecasts, bolstering the Loonie.
• Fresh tariff threats from Donald Trump have crimped CAD gains.

The Canadian Dollar (CAD) tested lower ground against the US Dollar (USD) on Friday, shedding weight despite Canadian labor data figures outperforming median market forecasts by a sizeable margin, kicking back economic downturn concerns and forcing rate watchers to trim their bets of another Bank of Canada (BoC) rate cut at the next interest rate meeting.

Adding further fuel to the risk-off fires that his administration started this week, US President Donald Trump has announced another round of tariff threats against Canada if the country doesn't deliver a satisfactory trade deal before the August 1 deadline. The new tariffs are due to come into effect the same day that "reciprocal" tariffs, announced in April, are set to begin after being delayed twice by Trump himself.

Daily digest market movers: Loonie gains on reduced BoC rate cut expectations, but trade risks remain at the forefront

• The Canadian Dollar briefly tested new two-week lows against the US Dollar despite better-than-expected Canadian jobs data.
• President Trump's newest tariff additions on Canadian goods are gripping market sentiment by the throat as trade tensions weigh on investors and business operators.
• Canada added 83.1K net new job positions in June, well above the expected 0.0K.
• The Canadian Unemployment Rate also ticked down to 6.9% versus the expected rise to 7.1%.
• With Canadian employment data beating the street, rate markets are pricing in a less than one-in-five chance of a quarter-point rate cut from the BoC later this month.
• Donald Trump says Canadian goods could be facing an additional 35% import tax beginning on August 1 if Canada doesn't meet Trump where he wants on trade terms, which appears to be a constantly moving target.

Canadian Dollar price forecast

The Canadian Dollar continues to struggle with holding onto near-term gains, and the USD/CAD pair is strung along a growing consolidation zone just below the 1.3700 handle. 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