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Canada’s Back in Trump’s Good Books – And the Loonie is Loving It

By February 5, 2025No Comments

Canada’s Back in Trump’s Good Books – And the Loonie is Loving It

Well, there you have it—Canada is back on Trump’s nice list. And as a reward? We get a 30-day break from tariffs and any talk of annexation (phew). No one is celebrating more than the Canadian dollar.

Last Sunday, just before the tariffs were supposed to kick in, the loonie was in rough shape, sinking to a 20-year low. But then, after a couple of phone calls between our Prime Minister and the U.S. President on Monday—and the announcement that tariffs would be delayed—the Canadian dollar quickly bounced back. By Tuesday, it hit 1.4306, its strongest level since January 22.

With Trump now shifting his focus to the European Union, China, and (for some reason) the Gaza Strip, some of the money that had been flooding into the U.S. dollar as a “safe bet” is starting to move elsewhere. That’s making the U.S. dollar weaker across the board, and the loonie is reaping the benefits.

Most analysts believe that with Trump stepping away from this issue (for now), his team will quietly try to smooth things over and clean up the mess behind the scenes.


Price Check: Where’s the Loonie Headed Next?

Alright, let’s talk about where the Canadian dollar might be going from here.

At the start of the week, the USD/CAD pair shot up, breaking through some key price points from earlier this year and peaking at 1.4793. But once news of the tariff delay hit, the U.S. dollar lost momentum, and the loonie took off in the other direction.

Now, traders are keeping an eye on whether this was just a temporary drop or if the U.S. dollar is really losing steam. The key level to watch is 1.4400—if the USD/CAD pair drops below that, it could mean more selling, and we might see the exchange rate slide further down toward 1.4261.

On the flip side, if the U.S. dollar bounces back, the next roadblock for the loonie is around 1.4500. If the pair climbs past that then look out for the 1.50 mark!

So, what’s the takeaway? The loonie has some momentum, but traders are waiting to see if this move has staying power or if the U.S. dollar is just catching its breath before another rally. Either way, it’s shaping up to be an interesting few weeks for Canada’s currency.

The Canadian dollar is currently trading at 1.4280 CAD against the US Dollar.



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