Canadian dollar gains as tariff-threat shock fades

Mexico is also a major supplier of electronics, machinery, oil and optical apparatus, and a significant amount of furniture and alcohol comes from the country into the United States. The international pushback came a day after Trump announced his plans for his first day in office, on 20 January, in a post on his social media website, Truth Social. “And so it starts,” Catherine McKenna, the former environment minister, posted on the BlueSky social media site, lamenting that Ottawa already spent a “bonkers” amount of time and energy dealing with the first Trump administration. Canada has “higher borrowing costs that are hitting an over leveraged household sector. We have soft commodity prices, we have weak business investment, and we have poor productivity, right?” said Schamotta. As the price of oil remained stubbornly high between 2010 and 2014, Canada’s currency traded between $1.05 and $0.95 US. But when the price of oil fell in 2015, the loonie plummeted as well.

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Victoria’s financial landscape in the early 1870s had been shaped by its status as a frontier economy and its strategic role in British Columbia’s integration into Canada. The city had emerged as a commercial hub during the Fraser Canyon Gold Rush (1858–1860), when it attracted miners and merchants. However, by the early 1870s, the gold rush had largely subsided, and Victoria’s economy shifted to industries like logging, fishing, and trade with Asia and the United States. Immediately after the announcement, the Canadian dollar fell 1.2% against the US dollar, and the Mexican peso fell 2% against the dollar, but both recovered some of their losses Tuesday morning. China’s yuan, though controlled by the government, traded higher – above 7.6% – in offshore markets. “About the issue of US tariffs on China, China believes that China-Us economic and trade cooperation is mutually beneficial in nature.

The gross domestic product report along with recent hotter-than-expected inflation data could push the market to reassess the chances of another outsized interest rate cut next month, Valente said. Bank of Montreal’s chief economist Douglas Porter says Canadians were already feeling the pinch of higher prices for just about everything and increased borrowing costs. Now, he says, the cost of just about anything imported from the U.S. is rising as well. The American dollar gained ground on the currency of almost every industrialized country in the world as he has promised tax cuts, deregulation and sweeping tariffs on all U.S. imports. It is quite surprising then, that after British Columbia became a Canadian province, such notes were even issued. But as the capital of British Columbia, issuing these notes payable at Victoria must have been thought an important contribution to the growth of the region.

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Colborne says even though his company stands to benefit, the low dollar reflects badly on the state of the broader Canadian economy. “We are one of the most interest rate sensitive economies in the world. We’ve been hit hard by the rise in inflation and interest rates in particular,” said Porter. Trading levels remained muted until the pandemic crashed into the economy. Inflation, debt and government spending started weighing down the dollar. But it will also drive up prices of anything imported from the United States.

Canadian dollar gains as tariff-threat shock fades

The prime minister also spoke with the premiers of Ontario and local companies hiring Quebec. Donald Trump has levelled his most severe threat against Canada in years, warning that on his first day in office he might impose punishing economic sanctions across North America. The day range on the loonie was 70.52 US cents to 71.53 US cents in early trading.

Scott Bessent, Trump’s pick for Treasury secretary, has said that tariffs would not add to inflation if they are implemented correctly. Wall Street cheered Bessent’s appointment, because he is widely expected to roll out tariffs gradually. During Trump’s first term, CNN reported that he implemented tariffs on about $380 billion worth of goods that applied to thousands of Chinese-made products, including baseball hats, luggage, bicycles, TVs and sneakers. The Trump tariffs also hit foreign steel, aluminum, washing machines and solar panels.

Compare our rate and fee with our competitors and see the difference for yourself. The problem with tariffs is that they often result in retaliatory actions by targeted countries, kicking off a trade war – and that’s exactly what happened during Trump’s first term. That blunted the tariffs’ effect on domestic manufacturing, because manufacturers’ goods became less attractive to overseas buyers. Many US imports from Canada and Mexico are exempted from tariffs because of the USMCA trade agreement between the three nations that Trump pushed for during his first administration.

With Canadian dollar trading at 5-year low, what is the effect on the B.C. economy?

• Canadian third-quarter gross domestic product data, due on Friday, could offer clues on the pace of further interest rate cuts expected from the Bank of Canada.
• They characterized the call as productive and said that Trudeau and Trump promised to stay in touch in the days to come.
• Oil prices rose in early trade after falling in the previous session as investors took stock of a potential ceasefire between Israel and Hezbollah, weighing on oil’s risk premium.

“The things we sell to the United States are the things they really need,” Deputy Prime Minister Chrystia Freeland said on Tuesday. “We sell them oil, we sell them electricity, we sell them critical minerals and metals.” President Joe Biden has left in place the tariffs on China that Trump introduced in his first term, and added a few more of his own. He denied that China allows chemicals used in the manufacture of illegal drugs – including fentanyl – to be smuggled to the US. Meanwhile, a spokesman for China’s embassy in Washington, Liu Pengyu, told the BBC that “China-US economic and trade co-operation is mutually beneficial in nature”. The issue of drugs, she added, “is a problem of public health and consumption in your country’s society”.

While the news calmed fear of disruption to Middle Eastern supply, the Israel-Hamas conflict “never actually disrupted supplies significantly to induce war premiums” this year, said senior market analyst Priyanka Sachdeva at Phillip Nova. Adair said the end of September was a turn date when the U.S. dollar started to rally against everything the Canadian dollar fell against the U.S. one. Victor Adair, a trader who runs a blog, said fxtm forex broker review in the last week the Canadian dollar has fallen about five cents since late September. The Canadian 10-year yield eased 6.5 basis points to 3.221% as investors globally set aside elevated U.S. inflation and worried about the growth outlook. “The price action following Trump’s remarks support this view, with an initial knee-jerk sell-off giving way to a recovery as investors anticipate a negotiated outcome.” And he puts the blame for that on policy-makers in Ottawa who, he says, spent too much, printed too much money and weakened the Canadian economy in the process.

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Surge pumps oil primarily in central Alberta and southern Saskatchewan. The Canadian dollar has been on a long, slow decline since the summer of 2021. But the decline has picked up steam this month as the U.S. dollar soared on news that Donald Trump had won re-election. All market data (will open in new tab) is provided by Barchart Solutions.