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US dollar firms against Canadian dollar as tariffs loom and inflation cools

USD/CAD traded near 1.4084, after Trump announced 50% tariffs on nearly $20 billion of Canadian imports taking effect August 19.

Reported · Written up by our desk · Major Pairs

USD/CAD extended gains for a second straight day, trading around 1.4084 as the US dollar stayed supported by safe-haven demand amid renewed Middle East tensions. FXStreet said the Canadian dollar also faced pressure from fresh trade frictions with the United States. US President Donald Trump announced a 50% tariff on nearly $20 billion worth of Canadian imports, with the move scheduled to take effect on August 19. Canadian Prime Minister Mark Carney called the tariffs a direct violation of the USMCA, while adding that Ottawa remains committed to negotiations. The outlook for the Canadian dollar also weakened after Canadian inflation came in softer than expected, which FXStreet said supports the Bank of Canada’s steady policy stance. Easing price pressures can reduce the urgency for an interest rate hike, creating near-term headwinds for CAD.

FXStreet tied the broader currency move to geopolitical developments as well, noting the US carried out a tenth consecutive night of strikes against Iran and Iran’s Revolutionary Guards targeted US military assets in the region. The US Dollar Index traded around 101.10 for a fourth consecutive day, while WTI rose to about $84.32 per barrel, up nearly 2.5%, which could help limit downside for the oil-linked Canadian dollar.

Latest closeWTI crude $79.00 ▼0.8%|Dollar index 100.71 ▲0.2%

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