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Canadian dollar set for worst day as trade talks collapse
The loonie fell as much as 0.6% to C$1.3844 per US dollar, with some analysts warning fresh US tariffs could push it to C$1.41 in the third quarter.
The Canadian dollar was headed for its worst day against the US dollar in more than two months after trade talks between Canada and the US collapsed, according to LiveMint Markets citing market coverage. The loonie slid as much as 0.6% to C$1.3844 versus its US counterpart, moving lower against all Group of 10 currencies and tracking its weakest performance since June 17.
Selling could extend as Washington imposed new 50% tariffs on billions of dollars of Canadian goods, threatening an economic pickup expected later this year, market watchers said. Prime Minister Mark Carney’s pledge to match US duties “dollar for dollar” was also cited as a risk to investor confidence.
MUFG’s Derek Halpenny forecast the Canadian dollar could weaken further toward C$1.41 per US dollar in the third quarter, noting downside risks may intensify as the trade dispute remains unresolved. CFTC data also suggested positioning has room for further deterioration, with hedge funds having trimmed some bets on loonie weakness.
Interest rate pricing in Canada is another factor, with swaps markets pricing roughly 70 basis points of interest rate hikes through June. Brown Brothers Harriman’s Elias Haddad said that if those expectations are dialed back, the currency could stay under pressure in the near term.