The Canadian dollar strengthened toward 1.36 per US dollar, reaching a two-week high as global capital flows shifted toward Canada’s relative stability amid persistent US policy uncertainty. This advance came even as Canada’s economy contracted by 0.6% in the fourth quarter. The Loonie’s gains were driven largely by trade and policy developments rather than domestic growth data.
The key catalyst was a US Supreme Court ruling that struck down broad emergency tariffs, easing some of the trade-related risk hanging over North American markets. Although the White House quickly moved to impose new Section 122 duties, the measures explicitly exempt trade-compliant Canadian goods, effectively securing Canada’s access to the US market.
At the same time, higher-than-expected US producer price figures failed to lift the US dollar, as investors focused instead on declining Treasury yields. Canada also drew support from a rebound in oil prices toward $66 per barrel after nuclear negotiations stalled, reducing the likelihood of additional supply coming to market.
Together, Canada’s protected trade status and firmer energy prices allowed the Loonie to shrug off the domestic growth setback. In this environment, investors are increasingly positioning the Canadian dollar as a relatively stable alternative within an otherwise unsettled North American trade landscape.
