FX.co ★ Loonie Weakens to 2-Week Low

The Canadian dollar recently dropped to its lowest level in two weeks, surpassing 1.37 against the US dollar, following President Trump's announcement of new 50% tariffs on copper, effective August 1st. He also issued warnings about potential similar tariffs on semiconductors and pharmaceuticals. This situation is putting pressure on foreign exchange revenues from the United States, Canada's largest trading partner, and negatively affecting earnings and investments in critical export sectors, such as energy, mining, automotive, aluminum, and lumber. In parallel, minutes from the US Federal Reserve's June meeting indicated that while most policymakers are supportive of rate cuts later this year, there remains disagreement on how tariffs might affect inflation. This uncertainty is contributing to the strength of the US dollar. Domestically, Canada faced an increase in its merchandise trade deficit in June, even as private sector activity saw a downturn for the seventh straight month. This pattern underscores Canada's weakening economic growth and suggests that the Bank of Canada may hold off on easing monetary policy. Additionally, oil prices have fallen from their peak earlier in the summer despite OPEC+ maintaining production discipline, which has removed a vital support factor for the Canadian dollar.