The Canadian dollar is trading at its lowest level against the U.S. currency since 2003 amid signs of an escalating trade war between the two countries.
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The Canadian has fallen sharply against the greenback after U.S. President Donald Trump announced 25% tariffs on most imports from Canada and it is now trading for 68.13 cents U.S., its lowest level against the U.S. currency in 21 years.
Canada’s dollar has been steadily declining as the U.S. dollar has strengthened in the months since Trump won re-election last November. The latest decrease in Canada’s dollar comes as the U.S. dollar continues to strengthen against a basket of foreign currencies that also includes the Euro and Japanese Yen.
Escalating Tensions
Over the weekend, Trump announced that the U.S. would impose tariffs of 25% on most Canadian goods, and a 10% tariff on Canada’s oil and natural gas imports, starting Feb. 4. Canada has responded by announcing retaliatory tariffs on up to $155 billion of U.S. imports.
The prospect of a full-blown trade war between the U.S. and Canada has pushed the Canadian dollar downwards, and it is now sitting at its lowest level in more than 20 years. The global selloff in equities comes as traders, analysts, and retail investors grapple with the implications of a global trade war, with Trump also threatening to impose tariffs on Europe and the United Kingdom (U.K.).
Is the Vanguard FTSE Canada All Cap Index ETF a Buy?
The Vanguard FTSE Canada All Cap Index ETF TSE:VCN -0.76% ▼ , which provides broad exposure to Canadian equities, has a consensus Moderate Buy rating based on 160 Wall Street analysts. That rating is based on 132 Buy, 26 Hold, and two Sell recommendations issued in the last three months. The average VCN price target of $58.61 implies 13.09% upside from current levels.
