The Canadian dollar continues to decline amid an ongoing trade battle with the U.S. and on-again, off-again tariffs.
The loonie, as the Canadian currency is known, fell as much as 0.6% on March 11 to trade at $0.69 U.S., its weakest level in six months.
Last September, the Canadian dollar was trading as high as $0.75 U.S. The loonie is the
only currency among the Group of 10 countries to fall against the U.S. dollar this March.
Economists attribute the slide in the Canadian currency to Trump’s tariffs, which have increased the likelihood of recession occurring in Canada this year.
The weakened dollar comes as the Bank of Canada is widely expected to further reduce interest rates by 25-basis points on March 12.
However, the near-term outlook for the Canadian dollar remains bearish, with sentiment in foreign-exchange markets worsening.
Futures traders are positioning for further losses in the loonie even as the U.S. dollar also declines and suffers its worst slump since the bear market of 2022.
Traders currently have $10 billion in short bets against Canada’s dollar, according to the Commodity Futures Trading Commission (CFTC).
A short is a bet that a security or asset’s value will decline in the near-term.
In a recent note to clients, strategists at Cooperative Rabobank in New York City said that the loonie could fall another 6% in coming weeks and months depending on how the trade battle between Canada and the U.S. plays out.
