The Canadian dollar stayed under pressure on Tuesday, trading near its lowest point in 18 months despite a surprising improvement in the country’s trade balance. The loonie was last seen at around C$1.4285 per U.S. dollar, with the USD/CAD pair up about 0.09%. The pair has fluctuated between C$1.4256 and C$1.4285 during the day.
Canada’s merchandise trade surplus expanded to C$4.2 billion in August, marking the largest surplus in over four years. This figure far exceeded the C$1.55 billion surplus that economists had anticipated. The strong trade data suggests a temporary boost for the Canadian economy, but its sustainability remains uncertain.
The surge in exports to the United States played a key role in the trade surplus. Exports to the U.S. climbed 8.1% in August, while imports from the country dropped 2.5%. This pushed Canada’s trade surplus with its largest trading partner to C$11.2 billion, the highest in 19 months. The U.S. accounted for nearly 70% of Canada’s exports, the highest share since September 2025.
Overall exports rose 2.5% to C$77.91 billion, driven by a 4.7% increase in energy exports to C$19.03 billion. Consumer goods, industrial machinery, and electronics exports also saw gains. Imports fell 2% to C$73.71 billion, with motor vehicles and parts leading the decline. The Canadian dollar had already weakened to an 18-month low on Monday, partly due to broad gains in the U.S. dollar and a contraction in Canada’s services sector.