The Canadian dollar weakened toward 1.37 per US dollar on Monday, trading near one-month lows as global markets weighed a sharp shift in US trade policy against signs of easing inflation at home. The loonie initially strengthened after the US Supreme Court struck down earlier emergency tariffs, but those gains quickly reversed when President Trump invoked Section 122 to implement a new 15% global surcharge. This renewed trade tension restored a significant headwind for Canada’s export-oriented economy just as January CPI data showed inflation slowing to 2.3%, fueling expectations that the Bank of Canada may soon end its hold at 2.25%.
Additional downward pressure came from a firm US dollar, underpinned by hawkish signals from incoming Federal Reserve leadership and a steady US core PCE reading of 3%. Even a modest uptick in oil prices failed to lift the loonie, as the erosion of Canada’s yield advantage and the resurgence of protectionist risks more than offset the brief boost from the landmark court decision.
