**BREAKING: Canadian Dollar Plunges as Trade Negotiations with US Collapse**
The Canadian Dollar fell sharply against the US Dollar on Monday morning, with USD/CAD recovering to near 1.3820 during early European trading. The selloff follows the complete breakdown of trade negotiations between the United States and Canada, which have now escalated into a full trade war between the two major North American economies.
The collapse in diplomatic talks has immediately pressured the CAD as markets price in economic uncertainty and potential disruptions to cross-border commerce. Traders are repositioning ahead of expected volatility in Canadian assets and North American supply chains. The development marks a significant deterioration in bilateral relations between the traditionally aligned trading partners, with immediate implications for Canadian exporters and financial markets.
Currency desks are monitoring for further weakness in the loonie as details emerge on potential tariffs and trade restrictions. Canadian equity markets and commodity prices, particularly energy, face downward pressure.
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FXnCO Insight
** Long USD/CAD positions appear favorable in the near term as trade war escalation will likely continue weighing on the Canadian Dollar.
Source: FXStreet