Canadian Dollar Hits Two-Decade Low As Markets Reel From Tariffs -

Canadian Dollar Hits Two-Decade Low As Markets Reel From Tariffs

Feb 03, 2025Jeremy ParkinsonFinance0

Photo by Michelle Spollen on Unsplash
The Canadian Dollar (CAD) plummeted to its lowest bids against the US Dollar (USD) in 21 years at the outset of the trading week after the US and Canada went tit-for-tat on trade tariffs that will pulverize key aspects of both economies. Overall market sentiment recovered ground after Mexico was able to negotiate a one-month ceasefire on US tariffs targeting goods imported from Mexico, but the Loonie is still testing its lowest bids since 2020.The US imposed a flat 25% import tariff on all goods crossing the border from Canada over the weekend, though US President Donald Trump caved on pressure to reduce tariffs on Canadian-sourced Crude Oil to 10%. Canada immediately responded with their own export taxes on goods and energy sold to the US, daring President Trump to follow through with his threat to double import fees on Canadian goods if Canada retaliated against his tariffs. According to some analysts, the tit-for-tat trade spat between the US and Canada could add another 0.7% to underlying core demand-led inflation in the US.

Daily digest market movers: Trade war 2.0 underway as US bills its own businesses

The Canadian Dollar hit 1.4800 against the US Dollar for the first time in over two decades.

Markets have recovered their footing, but USD/CAD is still testing into pandemic highs as market sentiment keeps the Greenback bid.

A one-month reprieve on the US’ tariffs on Mexico has been granted as Mexican President Claudia Sheinbaum agrees to trade negotiations with President Trump’s cavalcade of appointees with very important jobs but little practical experience. Canada opted to retaliate with export fees on the exact same goods that the US will be charging import taxes on.

President Trump promised to double tariffs if either Canada or Mexico retaliated.

Donald Trump’s tariffs are broadly expected to crunch the Canadian economy, as well as contribute to targeted joblessness within the US and contribute meaningfully to core US inflation metrics.

Jumpstarting inflation and a possible rise in US Crude Oil costs is a poor way to get rate cuts from the Federal Reserve (Fed).

Canadian Dollar price forecast
The Canadian Dollar came within a stone’s throw of 1.4800 against the US Dollar early Monday before markets were able to pump the brakes. The Loonie has recovered some footing after falling to 21-year lows, in tandem with a slight easing in the Greenback.USD/CAD is still trading into almost five-year highs near the 1.4600 handle as the Greenback accelerates into a sixth straight gaining session against the Loonie. USD/CAD has risen over 10% bottom-to-top from its low of 1.3420 last September. USD/CAD daily chart More By This Author:Dow Jones Industrial Average Sinks Amid Renewed Tariff Threats
EUR/USD Struggles Under The Weight Of The Greenback
EUR/USD Backslides Ahead Of Fed Rate Call