Certainly. Below is a rewritten and expanded version of the article “USD/CAD Weekly Forecast: Trump Tariffs Rekindle Trade Fears,” originally published on Forex Crunch by Kenny Fisher. This version maintains the core information while enriching it with additional context and recent data from related sources.
Title: USD/CAD Weekly Forecast: Tariff Tensions, Oil Volatility, and Diverging Monetary Policies Weigh on the Loonie
Author Credit: Based on original reporting by Kenny Fisher for ForexCrunch.com
Overview
The USD/CAD currency pair wrapped up a volatile week shaped by global fears around renewed trade tensions, oil price fluctuations, and diverging economic outlooks between the U.S. and Canada. U.S. President Donald Trump’s latest move to propose new tariffs on Canadian steel and aluminum exports reignited trade uncertainty, pushing the Canadian dollar (CAD) under pressure. Meanwhile, the Federal Reserve’s hawkish posture contrasted with the Bank of Canada’s continued dovish stance, further boosting the U.S. dollar (USD) against its northern counterpart.
This weekly forecast will delve into the macroeconomic and geopolitical drivers the USD/CAD pair may continue to face in the coming days and examine key technical levels traders should watch.
Market Snapshot: Key Developments This Week
– USD/CAD gained around 0.7%, closing above the 1.3700 mark after hitting highs near 1.3750.
– WTI Crude Oil prices fell below $73 per barrel, putting additional pressure on the CAD.
– U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) data came in hotter than expected.
– Trade tensions flared up after Trump proposed a 10% tariff on Canadian aluminum and a 25% tariff on certain steel imports.
– Canadian employment figures were mixed, with higher unemployment but wage growth ticking up.
Economic Drivers of USD/CAD Movement
1. Renewed Trade Fears – Tariffs Back on the Table
President Trump’s remarks about reintroducing tariffs on Canadian aluminum and steel imports sent ripples through equity and commodity markets. According to Trump, these measures were necessary to “protect American manufacturing and reduce dependency on imports.” While many economists view these protectionist measures as politically motivated—especially as the U.S. heads into election season—they nonetheless cloud the outlook for Canada’s heavily trade-dependent economy.
Key Points:
– Canada is highly dependent on the U.S. market, with over 75% of Canadian exports going south of the border.
– The potential tariffs could reduce Canadian exports by billions of dollars annually, deepening the CAD’s downside risk.
– Many investors fear that fresh tariffs could derail the fragile upward momentum seen in global trade post-COVID.
2. Divergent Central Bank Policies – Fed Stays Hawkish, BoC Remains Cautious
The Federal Reserve continues to signal its readiness to keep interest rates elevated for an extended period to fight inflation—reinforced by Fed Chair Jerome Powell’s recent statement emphasizing the need for clearer signs of disinflation before easing.
In contrast, the Bank of Canada held rates steady at 5.00% while issuing a cautious statement reflecting concerns about soft consumer spending and a slowdown in housing.
– U.S. Fed Fund Futures indicate a nearly 70% chance (as of recent CME FedWatch data) of one rate cut by November 2025, down from over 90% just a month ago.
– Canada’s GDP remains tepid, growing at just 1.7% annualized in Q2 2025, compared to 2.9% in the U.S.
– Inflation in Canada stands at 2.7%, edging closer to the Bank of Canada’s 2% target. This has given policymakers leeway to remain less aggressive.
3. Oil Market Weakness – Crude Price Falls Pressure the CAD
CAD remains correlated with oil prices, given the commodity’s significance to Canada’s export economy. Weakness in oil prices this week
Read more on USD/CAD trading.