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Canadian dollar recovery faces pressure as US-Canada trade tensions flare
OCBC cited 50% US tariffs on about USD 20 billion of Canadian imports and Canada’s planned dollar-for-dollar retaliation from 8 September as new risk for the loonie.
OCBC strategists Sim Moh Siong and Christopher Wong warned that renewed US-Canada trade tensions could dent the Canadian dollar’s recent recovery, following the collapse of talks and fresh tariff threats.
They pointed to a new tariff backdrop, saying the US imposed 50% tariffs on about USD 20 billion of Canadian imports, prompting Canada to announce dollar-for-dollar retaliation from 8 September.
The note also linked the currency outlook to a shift in the economic risk picture, arguing that the loonie’s recovery support from falling unemployment may be offset by uncertainty around the trade dispute and its knock-on effects for sectors including steel, dairy, and electronics.
FXStreet added market context that the broader dollar environment has turned more uncertain amid policy headlines, which can further weigh on risk-sensitive currencies as traders await additional details.