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USD/CAD holds near 1.38 despite US-Canada trade escalation
Action Forex links the muted USD/CAD move to economically modest, well-telegraphed US measures, while Brent near $100 is a bigger near-term driver for Canada.
The US-Canada trade dispute has escalated from tariffs to planned import bans and exclusions from major US government procurement contracts, yet USD/CAD has remained near 1.38 instead of breaking sharply higher, according to Action Forex.
The outlet says the new restrictions are relatively modest in economic scale and arrive after months of well-telegraphed tit-for-tat measures, noting the most recent US steps include import bans starting September 29, adjustments to part of the tariff list, and direction to exclude Canadian products from large, long-term procurement contracts until Washington sees greater reciprocity.
Action Forex also points to the difference between tariffs and bans, saying bans imply some trade should not occur at all, but the market impact depends heavily on size and timing. It adds that Washington designed targeted imports to be manageable in dollar terms, with a senior White House official describing the targeted categories as only single-digit billions of dollars annually.
For Canada specifically, the analysis highlights a competing driver, with Brent near $100 providing a far more immediate counterweight to currency pressure than the trade escalation itself.
It further details Canada’s earlier Tuesday retaliation, including retaliatory tariffs of 15%, 25%, and 50% across C$27.6bn of US goods, doubling steel and aluminum duties to 50%, and backing the measures with C$5.42bn in support for affected firms and workers.
Latest closeBrent $99.39 ▲3.2%