Canadian Dollar Surges to New High! Over 10,000 Workers Unemployed as Canada-U.S. Launch New Round of Trade Talks in May
Canadian Dollar Soars to 5-Month High Amid U.S. Trade Policy Uncertainty and BoC Rate Pause Speculation — Over 10,000 Auto Workers Laid Off as Canada-U.S. Set New Trade Talks in May
Driven by volatile U.S. trade policy and market expectations that the Bank of Canada (BoC) will pause interest rate cuts, the Canadian dollar surged on Friday (April 11), hitting its highest level against the U.S. dollar in five months — sending shockwaves through the market.
According to forex data, the loonie appreciated by 0.7% on the day, trading at USD 1 = CAD 1.3880, equivalent to 72.05 U.S. cents per Canadian dollar. It briefly touched 1.3840 intraday, the strongest since November 6 last year. Over the week, the Canadian dollar gained 2.4% — rising for six consecutive sessions and marking its biggest weekly gain since June 2020 and its strongest performance in five years.
The loonie also climbed significantly against the Chinese yuan, briefly hitting 5.2810 earlier in the day. Although it later pulled back, it remained at its highest level since August last year.
George Davis, Chief Technical Strategist at RBC Capital Markets, noted that the U.S.’s wavering stance on tariffs has cast doubt on the credibility of its government and heightened concerns about the U.S. economic outlook — pressuring the greenback and boosting the loonie.
The U.S. Dollar Index (DXY) weakened against a basket of major currencies, while the U.S. 10-year Treasury yield approached its biggest weekly gain in nearly two decades. Meanwhile, U.S. consumer sentiment for April dropped sharply, with inflation expectations for the next 12 months surging to their highest since 1981.
👉🏻 BoC Policy Direction Under Spotlight
With equity markets in flux and U.S. tariffs officially taking effect, uncertainty is mounting around Canada’s economic outlook. Markets now estimate a 60% chance that the Bank of Canada will pause rate cuts at its upcoming April 16 policy meeting. Last month, the BoC lowered its benchmark interest rate to 2.75% and signaled a “cautious approach” moving forward, aiming to strike a balance between inflationary pressure and weak demand.
However, TD Bank Senior Economist James Orlando suggested that the likelihood of further cuts is increasing. He argued the BoC should lower rates by at least another 50 basis points in the coming months to offset the economic impact of new tariffs.
Stephen Brown, Deputy Chief North America Economist at Capital Economics, predicted that while Canada will likely avoid a recession, its economic growth will stagnate and inflationary pressure will rise. He expects the BoC to cut rates three more times, bringing them down to 2%. Brown warned that widening interest rate differentials between Canada and the U.S. could weigh further on the loonie, potentially pushing it below 70 cents to around USD 0.69.
👉🏻 Auto Sector Hit Hard: Over 10,000 Workers Laid Off
The U.S. tariffs on Canadian automobiles have sparked fresh turmoil in the industry. Automaker Stellantis announced production halts at plants in Windsor, Ontario; Warren, Michigan; and Mexico, affecting roughly 12,000 auto parts workers.
The Windsor facility has already informed employees of a two-week shutdown beginning April 7, with potential further adjustments based on future production plans. The company stated that the decision is directly related to the new round of U.S. tariff measures.
General Motors’ CAMI plant in Ingersoll, Ontario, was also affected, suspending electric vehicle production until October, with around 500 layoffs expected. The workers’ union confirmed that temporary layoffs will begin on April 14. Although the plant is expected to briefly resume operations in May, it will shut down again until October 2025.
The factory will undergo upgrades in preparation for new vehicle models in 2026 and will switch to single-shift operations.
👉🏻 Canada-U.S. to Begin New Trade Talks in May
Amid escalating trade tensions, Canadian Prime Minister Carney confirmed on Friday that he had reached an agreement with the U.S. President to begin a new round of bilateral trade talks in early May.
Posting on social media, Carney revealed that the Canada-U.S. Relations Cabinet Committee held an emergency meeting that morning to address the latest round of U.S. tariffs. He stated, “These changes have already impacted our economy — especially the job market.”
He emphasized the government’s commitment to protecting the auto industry and workers’ rights, and announced the elimination of the Employment Insurance (EI) waiting period, allowing affected workers to access financial support more quickly.
“We have a clear strategy. Regardless of the election outcome, Canada will face the U.S. with strength and resolve — defending our national interests”.
