Canadian Dollar Races to New Low Amid Trump‑Tire Talk
Looks like the CAD is feeling the heat (and the winter chill) as it nudges toward a multi‑year trough, thanks to whispers about President Trump’s looming tariff show‑off.
What’s Behind the Slump?
- Trump’s “Tariff Threat”: No in‑person announcement yet, but the market’s already spooked. A “tactical” approach might actually calm the nerves a bit.
- Trudeau’s “We’re Ready” Stance: The PM brings his own brand of uncertainty—if tariffs hit, Canada’s reply could make the dollar feel more shaky.
Inside Canada: Industry & Prices
December’s Industrial Product Price Index (IPPI) nudged up 0.2%—the third straight month of growth, though the jump was a touch shy of what folks were hoping for. On the yearly front, it’s up 4.1%.
Why the rise? Think cars and aluminum:
- Automobiles kept the engines revving.
- Aluminum prices climbed because China pulled the plug on export tax breaks, tightening supply.
These rising commodity costs are a sweet spot for the CAD, giving it a lift.
Raw Materials & Oil: A Mixed Bag
Raw Materials Price Index (RMPI) actually leapt 1.3% in December—breaking expectations and fueling a 9.1% yearly surge. But oil? It’s still under threat from a potential slowdown in global growth, especially if trade rattles get louder.
Remember, Canada’s alive on the crude oil trade, so a bearish oil outlook could slam the CAD harder.
Future Forecasts: Why We’ll Be Watching
- British‑style uncertainty over trade rules keeps the CAD on a bumpy ride.
- Bank of Canada might cut rates soon—usually a sideways move for the dollar.
- Retail sales numbers that fall short could trigger more selling pressure.
All in all: expect the Canadian dollar to hold its breath until we see how the trade saga unfolds.
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