Canadian Dollar Slides 0.2% as Oil Drops

Overview

The Canadian dollar weakened against the U.S. dollar on 4 August 2026 as oil prices fell, even though Canada recorded its fourth consecutive month of trade surpluses.

Currency Movement

The loonie traded 0.2 % lower at 1.4070 CAD per U.S. dollar (71.07 U.S. cents), after touching an intraday low of 1.4076, the weakest level since the previous Wednesday.

Trade Balance

June trade data showed a surplus of C$3.86 billion (approximately US$2.75 billion), the highest in four years and above the consensus forecast of C$3 billion.

Economic Growth

Preliminary estimates indicated that real GDP grew at an annualised 3.4 % in the second quarter.

Manufacturing

Separate data released on the same day indicated that Canada’s manufacturing sector expanded in July at the fastest pace in more than four years, driven by stronger domestic activity, although weak international demand raised concerns about the durability of the expansion.

Oil Prices

Crude oil, a key Canadian export, fell 5.7 % to $75.80 per barrel after comments from Qatari and U.S. officials suggested a possible diplomatic resolution to the Iran‑related tensions affecting the Strait of Hormuz.

External Factors

The United States announced new tariffs on nearly US$20 billion of Canadian goods in the preceding month, a development noted by Andrew Grantham, senior economist at CIBC Capital Markets, who warned that the export surge could be curtailed if tariff pressures intensify.

Implications

The combination of a weaker loonie, lower oil prices, and the prospect of additional U.S. tariffs creates headwinds for Canada’s export‑driven economy despite the recent trade surplus and manufacturing momentum.