Canada's Currency Takes a Hit as Trade Talks Collapse

Canada's currency, the Canadian dollar, took a significant hit on Monday after trade talks collapsed between Canada and the United States. The USD/CAD exchange rate rose to 1.385, with many predicting it will reach 1.40 in the third quarter.

The collapse of trade talks led to new 50% tariffs being imposed by the US, affecting around C$28 billion in Canadian exports. Canada has announced plans to respond with matching dollar-for-dollar measures, increasing the threat of reduced trade flows and steeper import expenses for both countries.

According to a consensus from five banks, USD/CAD is expected to reach 1.40 this quarter, which is roughly 1.1% higher than where it stood on Monday. If the impact dissipates, some forecast a move to 1.38 by the end of the year.