{
  "type": "article",
  "title": "Canada's Dollar Holds a 2.5% Quarterly Gain Even After Ottawa-Washington Trade Talks Collapse",
  "summary": "USD/CAD has climbed back above 1.38 after trade talks between Ottawa and Washington broke down, but the loonie still holds a roughly 2.5% quarter-to-date gain, while a Strait of Hormuz risk premium keeps oil and gold supported.",
  "content": "The Canadian dollar is holding onto one of its strongest quarters in more than a year, even though trade talks between Ottawa and Washington fell apart in late August. Analysts at National Bank of Canada point to a mix of upbeat domestic data, firmer commodity prices and a persistent geopolitical risk premium in oil and gold as the forces keeping the currency well supported.\n\nUSD/CAD Slides From A 19-Month High, Then Steadies\nUSD/CAD had climbed to around 1.42 by the end of June, marking the weakest level for the loonie in 19 months. A pair reading near 1.42 meant it took roughly C$1.42 to buy a single US dollar, a sign of just how much ground the Canadian currency had lost. From there, a string of positive economic surprises out of Canada, firmer prices for the commodities the country exports, and rising hope that trade tensions between the two neighbours would ease combined to pull the pair all the way down to 1.377 by August 21, its strongest point of the quarter for the loonie.\n\nThat optimism did not last. Trade negotiations between Ottawa and Washington broke down shortly after that August 21 low, and USD/CAD has since climbed back above 1.38. Even so, National Bank of Canada notes the loonie is still sitting on a quarter-to-date gain of roughly 2.5% against the US dollar, a move the bank says is broadly in line with the forecast it had set at the start of the summer.\n\nStrait Of Hormuz Tensions Keep A Risk Premium In Oil And Gold\nRenewed tension in the Strait of Hormuz during August has made traders far less confident that the situation there will return to normal by the end of the year. National Bank of Canada says market-implied odds of that happening have fallen below 30%, down sharply from more than 50% previously. Because the Canadian dollar tends to move with commodity prices, that lingering risk premium in both oil and gold has become another pillar of support for the loonie even as the trade dispute with Washington drags on.\n\nAussie Dollar Trades Near Its Best Level Since Mid-May\nCurrency markets elsewhere are showing a similar pattern of a weaker US dollar lifting other majors. AUD/USD held above 0.7200 during Tuesday's Asian session, close to its highest level since May 14. A rallying Japanese Yen has kept the US Dollar under broad pressure, outweighing whatever support the greenback might otherwise be drawing from hawkish bets on the Federal Reserve and from ongoing geopolitical tensions. On top of that, firming expectations that the Reserve Bank of Australia will raise interest rates again later this month have given the Aussie its own tailwind. Mixed trade balance data out of China, however, kept the pair from extending those gains any further for now.\n\nYen Strength Pulls USD/JPY Off A Six-Month Low\nUSD/JPY told a related story on Tuesday. The pair touched a six-month low below 153.00 earlier in the day before rebounding to trade above 154.00 in the second half of the session. That bounce looks like a technical correction rather than any change in the underlying trend, since upbeat Japanese wage growth data and an upward revision to Japan's second-quarter GDP have reinforced bets that the Bank of Japan will raise interest rates next week, a backdrop that continues to support the Yen even during the pullback.\n\nDiesel Prices Are Telling A Different Story Than Crude\nAway from currencies, the oil market looks calmer than it did a few months ago, but the diesel market is flashing a very different signal. The US diesel crack spread, which measures the premium that ultra-low sulphur diesel futures command over WTI crude, recently pushed above $100 per barrel for the first time on record, reaching an intraday high of just over $102.00. A crack spread that wide shows refiners are being paid unusually well to turn crude into diesel, even while crude prices themselves stay relatively contained.\n\nFor everyday households and businesses, these currency and energy market shifts rarely stay contained to trading screens. A firmer Canadian dollar makes Canadian goods and travel comparatively more expensive for Americans, while Australian and Japanese businesses watch their own currencies for similar reasons. Meanwhile a diesel crack spread above $100 a barrel raises the cost of running trucks, ships and heavy machinery, a cost that tends to filter through to freight rates and, eventually, retail prices.\n\nWhat this means for you\nThe biggest practical effect is on anyone holding, earning or converting Canadian dollars, Australian dollars or Japanese yen right now, plus anyone paying for freight or fuel-heavy services.\n\n• Travelers, students and remitters: A stronger Canadian dollar means travel, tuition or remittance payments to Canada now cost roughly 2.5% more in USD terms than at the start of the quarter, and rates may keep shifting depending on the Ottawa-Washington trade dispute.\n• Importers, exporters and forex traders: With USD/CAD back above 1.38, AUD/USD near five-month highs and USD/JPY bouncing off a six-month low, anyone hedging invoices or holding open positions should recheck rates and stop-losses now rather than assume recent levels will hold.\n• Transport and logistics businesses: A diesel crack spread above $100 a barrel, a record, raises the cost of running trucks and ships, a cost that can filter into freight rates even while crude oil prices stay calm.\n• Energy and gold investors: With odds of the Strait of Hormuz situation normalizing by year-end down below 30%, the risk premium supporting oil and gold prices could persist for longer.\n\nWhy this happened\nThe loonie's swing this quarter traces back to a clear sequence: weak sentiment pushed USD/CAD to a 19-month high near 1.42 by end-June, then improving data and trade optimism reversed it, before the Ottawa-Washington breakdown pushed the pair back up. The Strait of Hormuz risk premium adds a separate, geopolitical layer that is not directly about Canada but still feeds into CAD through commodity prices.\n\n• Economic data and commodities: A run of positive economic surprises out of Canada and firmer prices for the commodities it exports were the direct drivers pulling USD/CAD down to 1.377 by August 21.\n• Trade-talk optimism, then breakdown: Hopes that Ottawa and Washington would ease trade tensions helped extend the loonie's gains, but the actual breakdown of those negotiations shortly after August 21 is what pushed USD/CAD back above 1.38.\n• Renewed Strait of Hormuz tensions: Fresh tension in the strait during August cut the market-implied odds of normalization by year-end from more than 50% to below 30%, keeping a risk premium in oil and gold that indirectly supports the commodity-linked Canadian dollar.\n• Central bank and data drivers elsewhere: The Aussie's strength is tied to expectations of another RBA rate hike this month, while the Yen's resilience follows strong Japanese wage data and an upgraded Q2 GDP reading that support a Bank of Japan hike next week.\n\nQuestions & Answers\n\n1. Where did USD/CAD reach by the end of June?\nUSD/CAD climbed to around 1.42 by end-June, the weakest level for the loonie in 19 months.\n\n2. How low did USD/CAD fall in August, and why?\nIt fell to 1.377 on August 21 on positive economic surprises, firmer commodity prices and hopes for easing trade tensions.\n\n3. What happened after August 21?\nTrade negotiations between Ottawa and Washington broke down, pushing USD/CAD back above 1.38.\n\n4. What is the loonie's gain this quarter?\nThe Canadian dollar holds a quarter-to-date gain of roughly 2.5% against the US dollar.\n\n5. Why is a risk premium still built into oil and gold?\nRenewed tension in the Strait of Hormuz in August cut market-implied odds of normalization by year-end from over 50% to below 30%.\n\n6. Where is AUD/USD trading now?\nAUD/USD is above 0.7200, near its highest level since May 14.\n\n7. What is supporting the Australian dollar?\nA rallying Japanese Yen weighing on the US dollar and firming expectations of another RBA rate hike this month.\n\n8. What is happening with USD/JPY?\nIt rebounded from a six-month low below 153.00 to above 154.00, seen as a technical correction ahead of a possible Bank of Japan rate hike next week.\n\n9. What is unusual in the diesel market?\nThe US diesel crack spread pushed above $100 per barrel for the first time, hitting an intraday record of just over $102.00.",
  "url": "https://trendkia.com/en/market/ottawa-washington-varta-tutane-para-bhi-canadian-dolara-ki-timahi-barhata-2-5-para-barakarara-29591",
  "category": "Market",
  "publishedAt": "2026-09-08",
  "tags": [
    "USD/CAD",
    "Canadian Dollar",
    "Loonie",
    "Forex Market",
    "Strait of Hormuz",
    "AUD/USD",
    "USD/JPY",
    "Diesel Crack Spread"
  ],
  "language": "en",
  "site": "TrendKia"
}