USD/CAD hangs near multi-month low, below 1.4100 ahead of US/Canadian jobs data

USD/CAD trades with negative bias for the fourth successive day amid the prevalent USD selling bias.
Worries that Trump’s tariffs might trigger a US recession lift Fed rate cut bets and weigh on the buck.
The overnight downfall in Crude Oil prices undermines the Loonie and lends some support to the major.
Traders also seem reluctant to place fresh directional bets ahead of the US/Canadian jobs reports.

Haresh Menghani FXStreet

The USD/CAD pair remains under some selling pressure for the fourth straight day on Friday and currently trades around the 1.4070 area, down 0.15% for the day. Spot prices hang near a four-month low touched on Thursday and seem poised to heavy weekly losses, though a combination of diverging factors warrants caution for bearish traders.

The US Dollar (USD) struggles to capitalize on the overnight modest bounce from its lowest level since October amid concerns that US President Donald Trump's tariffs might trigger a recession and force the Federal Reserve (Fed) to resume its rate-cutting cycle. This led to the overnight slump in US Treasury bond yields and kept the USD bulls on the defensive, which continues to exert downward pressure on the USD/CAD pair.

However, the risk of a further escalation of the US-Canada trade war might hold back traders from placing aggressive bullish bets around the Canadian Dollar (CAD). In fact, Canadian Prime Minister Mark Carney said on Thursday that the previously announced retaliatory tariffs will remain in effect and that Canada will impose 25% tariffs on all vehicles imported from the US that are not compliant with the USMCA trade deal.

Meanwhile, Crude Oil prices consolidated Thursday's steep decline to a multi-week low amid worries that the widening trade war may dent global economic growth and dampen fuel demand. This could further undermine the commodity-linked Loonie and contribute to limiting the downside for the USD/CAD pair. Furthermore, traders might opt to wait for the US/Canadian jobs report and Fed Chair Jerome Powell’s speech.

Tariffs FAQs

What are tariffs?

Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.

What is the difference between taxes and tariffs?

Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.

Are tariffs good or bad?

There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.

What is US President Donald Trump’s tariff plan?

During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.

BRANDED CONTENT

The right broker can enhance your trading experience by offering key features suited to your strategy. Discover a curated list of brokers designed to meet various trading preferences.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

British Pound weakens below 1.3450 as US-Iran uncertainty boosts safe-haven US Dollar

The GBP/USD pair loses ground to near 1.3425 during the early Asian session on Tuesday. Uncertainty surrounding US-Iran talks drives traders toward a safe-haven currency such as the US Dollar against the British Pound. All eyes will be on the US July jobs data, which is due later on Friday.

EUR/USD declines as US Dollar gains on Middle East uncertainty

EUR/USD remains subdued for the third successive day, trading around 1.1500 during the Asian hours on Tuesday. The pair continues to hold losses as the US Dollar finds support from ongoing uncertainty in the Middle East, despite lingering hopes for a diplomatic breakthrough between the United States and Iran.

Gold lacks bullish conviction amid US-Iran impasse, ahead of US jobs data

Gold is attempting a tepid bounce around $4,050 in Asian trading on Tuesday, stalling a two-day decline amid looming US-Iran risks, as markets brace for a slew of US jobs reports due later this week. US JOLTS Job Openings Survey is in focus on Tuesday.

Morgan Stanley cuts Circle price target to $38 as stablecoin growth stirs concerns

Circle (CRCL) shares came under pressure on Monday after Morgan Stanley downgraded the company to underweight and sharply cut its price target. Morgan Stanley lowered its price target for Circle to $38 from $106, citing concerns over slower growth in USDC circulation and increasing pressure on the stablecoin issuer's core revenue model.

NFP week: What awaits Bitcoin and Gold

This is an NFP week as markets brace for the release of a large influx of job market statistics. The data rollout begins with the JOLTS Job Openings report on Tuesday, continues with the ADP Employment report on Wednesday and Jobless claims on Thursday, and finishes with the Nonfarm Payrolls report on Friday.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.