The USD/CAD strengthens above 1.3850 amid trade uncertainty.

SourceFxstreet

10 Sept 2025 00:34

• The USD/CAD is gaining ground around 1.3855 during the early hours of Wednesday's Asian session.
• Weaker Canadian economic data and ongoing uncertainty over tariffs weigh on the Canadian dollar.
• The growth of American employment was much less robust during the year up to March than previously announced.

The USD/CAD pair continues its rise towards 1.3855 during the early hours of Wednesday's Asian session. The Canadian dollar (CAD) is weakening against the US dollar (USD) as trade concerns put pressure on the Canadian economy. All eyes are on the US Producer Price Index (PPI) inflation data, which will be released later on Wednesday.

Uncertain outlooks for the Canadian economy have supported recent initiatives by investors to increase their bearish bets on the Loonie. Canadian employment data released on Friday showed that U.S. tariffs have slowed hiring momentum and restricted activity in key sectors. The unemployment rate in Canada rose to 7.1% in August from 6.9% in July, exceeding expectations of 7.0%.

"Although Canada benefits from the USMCA agreement and has one of the lowest effective tariff rates in the world, tariffs on other sectors and the ongoing uncertainty regarding a new trade agreement with the United States continue to cloud medium-term economic prospects," said Kevin Ford, FX and macro strategist at Convera.

On the other hand, the growing expectations that the American Federal Reserve (Fed) will implement a massive rate cut at its September meeting could weaken the greenback. U.S. job growth has proven to be weaker than expected throughout the year up to March. The number of workers on payrolls is likely to be revised down from a record 911,000, or 0.6%, according to the preliminary revision published on Tuesday. Traders will await more clues from the U.S. PPI inflation data for August later on Wednesday, ahead of the Consumer Price Index report (IPC).

I observe that this situation reflects the current trade tensions well. American tariff pressures are hurting Canada, and frankly, it frustrates me to see how these protectionist policies destabilize neighboring economies. The forex market has become a real battleground where we pay the costs of geopolitical disputes!

When I look at this unemployment rate rising to 7.1%, I think that behind these numbers, there are Canadian families who are suffering. And in the meantime, the major trading platforms continue to encourage speculation on these movements without much concern for the real consequences.

This downward revision of American jobs also shows that the American economy may not be as strong as we are led to believe. It smells like data manipulation to justify rate cuts!

The USD/CAD instrument becomes a perfect barometer of this global economic uncertainty. Buy or sell now? The question that all traders are asking, but few truly understand the geopolitical forces behind these price movements.