Canadian dollar strengthens to about 1.38 per USD in September
The Canadian dollar strengthened to around 1.38 per USD in September, driven largely by broad US dollar weakness. Canada’s retaliatory tariffs on $20 billion of US goods took effect, while firmer crude prices added support.
38 per USD in September, largely reflecting broad US dollar weakness. Meanwhile, Canada’s retaliatory tariffs on US goods took effect after Prime Minister Mark Carney’s government failed to reach a deal with Washington last month. The counter-tariffs cover $20 billion of US goods, with duties ranging from 15% to 50% on products including steel, furniture, clothing and electronics. The tariffs imposed last month targeted $20 billion, or 5%, of Canadian exports to the US, including wine, furniture, dairy products, cement, clothing, fishing rods and hockey equipment.
Firmer crude prices, which typically support the loonie given Canada’s status as a major oil exporter, have provided an additional tailwind. Further upside risks to oil prices remain as Iran threatens to strike regional energy infrastructure in response to US actions. Energy-driven inflation concerns could also lead to tighter BoC policy.