Select Language

USD/CAD strengthens above 1.3850 on trade deal uncertainty 

Breaking news

USD/CAD strengthens above 1.3850 on trade deal uncertainty 

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
update 2025.09.10 09:35
USD/CAD strengthens above 1.3850 on trade deal uncertainty 

update 2025.09.10 09:35

  • USD/CAD gains ground to around 1.3855 in Wednesday's early Asian session. 
  • Weaker Canadian economic data and ongoing tariff uncertainty weigh on the Canadian Dollar. 
  • US job growth was far less robust in the year through March than previously reported.

The USD/CAD pair extends the rally to near 1.3855 during the early Asian session on Wednesday. The Canadian Dollar (CAD) weakens against the US Dollar (USD) as trade worries put pressure on Canada's economy. All eyes will be on the US Producer Price Index (PPI) inflation data, which is due later on Wednesday.

An uncertain outlook for the Canadian economy supported recent moves by investors to increase bearish bets on the Loonie. Friday's Canadian job data showed that US tariffs pressured slow hiring momentum and tightened activity across key sectors. The Unemployment Rate in Canada ticked up to 7.1% in August from 6.9% in July, above the expectation of 7.0%. 

"While Canada benefits from the CUSMA deal and has one of the lowest effective tariff rates globally, tariffs on other sectors and ongoing uncertainty about a new trade deal with the U.S. continue to dampen the medium-term economic outlook," said Kevin Ford, FX & macro strategist at Convera. 

On the other hand, rising expectations that the US Federal Reserve (Fed) will deliver a jumbo rate cut at its September meeting could undermine the Greenback. US job growth came in weaker than expected in the year through March. The number of workers on payrolls will likely be revised down by a record 911K, or 0.6%, according to the preliminary benchmark revision out Tuesday. Traders will take more cues from the US PPI inflation data for August later on Wednesday, ahead of the Consumer Price Index (CPI) report. 

Canadian Dollar FAQs

The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada's largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada's exports versus its imports. Other factors include market sentiment - whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) - with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.

The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.

The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada's biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.

While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada's case is the Canadian Dollar.

Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.



 


Date

Created

 : 2025.09.10

Update

Last updated

 : 2025.09.10

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

USD/CAD stays above 1.4000 near six-month highs as Oil prices drop

USD/CAD moves little after reaching a six-month high of 1.4033 in the previous session, trading around 1.4020 during the Asian hours on Friday. The pair gained around 0.5% on Thursday as the commodity-linked Canadian Dollar (CAD) faced challenges amid lower crude Oil prices.
New
update2025.10.10 11:58

Silver Price Forecast: XAG/USD climbs above $49.50 amid uncertainty, Fed rate cut bets

Silver price (XAG/USD) climbs to around $49.70 during the Asian trading hours on Friday. The white metal holds positive ground after reaching the highest price in four decades, bolstered by safe haven flows, strong industrial demand, and expectations of the US interest rate cut. 
New
update2025.10.10 11:47

Japanese Yen hangs near eight month low against USD amid fiscal concerns and BoJ outlook

The Japanese Yen (JPY) recovers slightly after touching a fresh low since February 13 against a broadly firmer US Dollar (USD) during the Asian session on Friday, though the upside potential seems limited.
New
update2025.10.10 11:24

Japan's Kato says recently seen one-sided, rapid moves 

Japanese Finance Minister Katsunobu Kato said on Friday that he recently sees one-sided and rapid moves in the foreign exchange, adding that it's important for currencies to move in a stable manner reflecting fundamentals.
New
update2025.10.10 11:22

Australian Dollar receives support from RBA Bullock's cautious remarks

The Australian Dollar (AUD) advances against the US Dollar (USD) on Friday, recovering its recent losses registered in the previous session. The AUD/USD pair gains ground following the cautious remarks from the Reserve Bank of Australia (RBA) Governor Michele Bullock.
New
update2025.10.10 11:16

Fed's Daly: Inflation has come in much less than had feared

Federal Reserve (Fed) Bank of San Francisco President Mary Daly said on Friday that inflation has come in much less than she had feared. Daly further stated that the US central bank is projecting additional cuts in risk management.
New
update2025.10.10 10:58

Japan's Akazawa says US-Japan trade deal implemented smoothly

Japan's top tariff negotiator Ryosei Akazawa and US Commerce Secretary Howard Lutnick reaffirmed on Friday that the United States (US) and Japan trade agreement will serve to further strengthen the two nations' strategic and economic ties, Bloomberg reported on Friday. 
New
update2025.10.10 10:45

NZD/USD recovers to near 0.5750 as US government shutdown continues

The NZD/USD pair recovers some lost ground near 0.5750, snapping the three-day losing streak during the early Asian trading hours on Friday. Ongoing US government shutdown undermines the US Dollar (USD) against the New Zealand Dollar (NZD).
New
update2025.10.10 10:17

PBOC sets USD/CNY reference rate at 7.1048 vs. 7.1102 previous

The People's Bank of China (PBOC) set the USD/CNY central rate for the trading session ahead on Friday at 7.1048 compared to the previous day's fix of 7.1102 and 7.1329 Reuters estimate.
New
update2025.10.10 10:15

US Treasury Sec. Bessent says he expects a rebalancing soon, where India buys less Russian oil

US Treasury Secretary Scott Bessent said on Friday that we are going to see rebalancing where India buys less Russian oil soon.
New
update2025.10.10 09:24

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel