The dollar is recovering Monday after a roughly 2.6% one-month slide, while the Canadian dollar sits at the bottom of the major-currency table as 50% US tariffs take effect. The tariff hit has so far produced contained damage, but a looming Treasury announcement on Iran sanctions could still push oil, and USD/CAD, into a sharper move later in the session.
Dollar Steadies After Last Week's Slide
The dollar is leading major currencies Monday, followed by the yen and sterling, after entering the day still down roughly 2.6% over the past month. The rebound looks like consolidation after an extended selloff rather than a decisive trend reversal.
Fresh Treasury funding details have helped at the margin. Unnamed officials indicated part of the near-$1 trillion Treasury General Account could support expanded long-duration buybacks, reducing the need to fund purchases entirely through additional short-term bills. Officials also presented the move as removing one potential route by which the Fed might be drawn into Treasury financing operations, though it does not repair the deficit trajectory or the government's borrowing requirement.
CAD Absorbs Tariff Shock, but Damage Stays Contained
The loonie is the weakest major currency so far, yet selling has been relatively restrained given the deterioration in Canada-US trade relations. Negotiations collapsed late Friday, and 50% US tariffs are now in force under the first-ever presidential use of Section 338 of the Tariff Act of 1930. Ottawa has promised dollar-for-dollar retaliation beginning September 8.
Several factors explain the muted FX response. Some trade-risk premium was already priced in before talks formally failed, and the tariffs were known before Monday's session rather than arriving as a fresh intraday shock. Canada's own countermeasures are also still more than two weeks away, so the full two-way tariff confrontation has not yet hit.
A bigger test may still be ahead. Treasury Secretary Scott Bessent is due to announce Iran sanctions at 1:00pm EDT, after saying in a Financial Times op-ed that the objective is to sever the economic lifelines sustaining Tehran. Oil has pulled back after two consecutive weekly gains as traders take profits ahead of the announcement, but its scope and Tehran's response could still send crude, and CAD, into a more decisive move.
Source: ActionForex
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