USD/CAD Holds Firm Near 1.3700 as Trump’s Tariffs Weigh on Canadian Dollar

USD/CAD Steady Near 1.3700 on Trump’s New Tariffs and Solid Canadian Jobs Report

Loonie Struggles Despite Positive Employment Data

The USD/CAD pair holds modest gains near 1.3690 in Monday’s Asian session, buoyed by a stronger US Dollar and rising market caution. Renewed tariff threats by former US President Donald Trump have placed pressure on the Canadian Dollar (CAD), though upbeat Canadian employment data has softened the blow.

Trump Escalates Trade War With New Canadian Tariffs

Trump recently announced a 35% tariff on Canadian imports, to take effect on August 1, targeting key sectors like steel and aluminum. This move follows earlier tariffs of 50% on Canadian metals, deepening trade tensions between the US and Canada. The protectionist stance has sparked a risk-off tone, keeping commodity-linked currencies like the CAD under pressure.

Canada’s Labor Market Beats Expectations in June

Despite the trade headwinds, Canada posted strong employment numbers in June. The unemployment rate dipped to 6.9%, better than the expected 7.1%, while the economy added 83,100 jobs, far surpassing forecasts of just 8,800.

This data significantly reduces the likelihood of an imminent Bank of Canada (BoC) rate cut, offering some near-term support for the Loonie.

Traders Eye Canadian CPI for Further Clues

Looking ahead, markets will closely monitor the release of Canada’s CPI inflation data on Tuesday, which could shape expectations around the BoC's monetary policy path.

Conclusion: Trade Risks Keep USD/CAD Supported

The USD/CAD remains biased to the upside in the short term as tariff uncertainty weighs on CAD. While positive domestic data offers support, sentiment hinges on further developments in the US-Canada trade dispute and inflation figures due later this week.