The Canadian Dollar’s impressive third-quarter rally has hit pause after strong commodity prices and positive economic data drove USD/CAD below 1.38, according to National Bank of Canada analysts Marion and Dahms. The loonie’s gains were primarily fueled by elevated Oil and Gold prices, both key Canadian exports, combined with better-than-expected domestic economic indicators throughout the quarter.
However, NBC warns traders that fresh headwinds are emerging. New U.S. tariff threats and mounting trade uncertainty pose significant downside risks to Canadian economic growth, potentially capping further CAD strength. The analysts suggest this consolidation phase may be temporary before the currency resumes its upward trajectory, though the timing depends heavily on resolution of cross-border trade tensions.
Market participants should closely monitor any U.S. trade policy announcements and commodity price movements, as both factors remain critical drivers for CAD positioning in the near term.
FXnCO Insight
Traders should maintain cautious long-CAD positions while closely watching U.S. tariff developments, as trade policy shifts could quickly reverse recent loonie gains despite supportive commodity fundamentals.
Source: FXStreet