Certainly. Below is a rewritten and expanded version of the Forex Crunch article titled “USD/CAD Weekly Forecast: Trump Tariffs Rekindle Trade Fears” originally written by Yohay Elam. The content has been paraphrased, restructured, and expanded to meet a minimum of 1,000 words, including additional context and background information on current USD/CAD dynamics.
All credits for the original article go to Yohay Elam of Forex Crunch.
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# USD/CAD Weekly Forecast: Tariff Tensions Return as Trade Fears Resurface
The USD/CAD currency pair wrapped up a volatile week dominated by renewed global trade tensions, largely triggered by fresh tariff threats from former U.S. President Donald Trump. As Trump promises a tougher stance on trade if reelected, global markets—particularly those involving the Canadian dollar—are recalibrating in response. The news has reinvigorated market anxiety reminiscent of the 2018-2019 U.S.-China trade spat, which also impacted North American trade sentiment.
Heading into next week, economic indicators, central bank expectations, and geopolitical developments are expected to guide the pair’s next direction.
## USD/CAD Weekly Performance Recap
Over the past week, USD/CAD saw a moderate upward movement as risk appetite cooled due to escalating trade rhetoric. The currency pair climbed from levels near 1.3650 to touch highs around 1.3780 before retreating slightly before the weekend close. This movement was fueled by U.S. dollar strength, largely driven by safe-haven inflows, as markets reacted to Trump’s suggestion of imposing new tariffs should he return to office.
U.S. Dollar Index (DXY) performance also supported USD gains, while a softening in energy prices weighed down the Canadian dollar.
### Key Weekly Highlights:
– USD/CAD climbed nearly 1% over the week, reacting to news on trade policy shifts.
– Oil prices, a key driver for the Canadian dollar, corrected lower after previously rising on Middle East supply concerns.
– U.S. economic data remained supportive of USD, while Canadian data continued to point to a slowing growth trajectory.
## Trade Fears Reignite: Trump’s Tough Trade Talk
Trump’s latest remarks could be a gamechanger in global trade dynamics. During a campaign event, he announced potential plans to reintroduce steep tariffs—possibly across the board—on foreign imports into the U.S. He emphasized “unfair trade practices” and vowed to prioritize U.S. manufacturing by punishing countries that, according to him, “manipulate trade” to their benefit.
### Implications for USD/CAD:
– Canada, being tightly integrated with the U.S. through the United States-Mexico-Canada Agreement (USMCA), stands to lose if protectionist measures escalate.
– Previous episodes of U.S. tariff aggression (like the 2018 aluminum and steel tariffs on Canada) triggered countermeasures and volatility in USD/CAD.
– Markets are pricing in fresh uncertainty, with typical risk-off behavior boosting the U.S. dollar and pressuring CAD.
## Oil Prices and the Canadian Dollar
The Canadian dollar is heavily influenced by movements in crude oil prices, thanks to Canada’s large energy export sector. This week, WTI crude oil prices softened from earlier highs near $83 per barrel down to the low $80 range due to:
– Easing geo-political tensions in the Middle East, particularly between Israel and Hezbollah.
– Profit-taking after a multi-week rally in crude prices.
– U.S. crude oil stockpile increases, putting pressure on oil markets.
As oil retreats, so too does support for the loonie. Lower energy prices diminish Canada’s trade surplus and hinder CAD strength.
## Central Bank Divergence: BoC vs. Fed
Another key factor driving USD/CAD is diverging monetary policy between the Bank of Canada (BoC) and the U.S. Federal Reserve. The BoC surprised the market with a
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