Baystreet.ca - The Canadian dollar has fallen to its lowest level in two years vis-à-vis the U.S. dollar as oil prices weaken and concerns grow about American trade tariffs during a second Donald Trump presidency.
The loonie, as the Canadian dollar is known, is trading at 71.86 U.S. cents, its lowest level since mid-2022 as currency traders adjust to the reality of a new Trump administration.
Trump has promised sweeping tariffs on imported goods to the U.S. The tariffs could be especially hard on Canada, which ships 75% of its exports to America, including crude oil and natural gas.
At the same time as concerns grow over potential U.S. tariffs, the price of crude oil continues to decline, further weakening the loonie.
West Texas Intermediate (WTI) crude oil, the U.S. standard, has declined a further 3% in the last 24 hours and is now trading right around $68 U.S. per barrel.
Global demand for oil continues to slump as China's economy struggles and stimulus plans from the government in Beijing disappoint markets.
In addition to these foreign factors, evidence continues to mount that Canada’s domestic economy is slowing down, which has further pressured the loonie.
Canada added fewer jobs than expected in October as the economy sputters. Economists expect hiring and economic activity to rise in 2025 as recent interest rate cuts take hold.
Speculators have raised their bearish bets against the Canadian dollar in recent days, taking them to their highest level since mid-August of this year.
According to data from the U.S. Commodity Futures Trading Commission (CFTC), net short positions against the loonie have increased to 175,229 contracts from 167,499 a week ago.