Photo: Reuters

On September 9, 2025, the Canadian dollar, often called the loonie, dropped against the U.S. dollar. The fall was small but important. The loonie went down 0.3%, which meant it cost 1.3845 Canadian dollars to buy 1 U.S. dollar. In U.S. terms, that made the Canadian dollar worth only 72.23 cents.

This brought the loonie close to its weakest level since August. For many Canadians, this raised worries about how their money is performing compared to the American dollar, which often acts as a global standard.

Why the Canadian Dollar Is Falling

The Canadian dollar is influenced by many forces, both inside Canada and around the world. On this day, three main issues stood out: uncertainty about a trade deal, tariffs from the United States, and weak job numbers in Canada.

1. Trade Deal Uncertainty

Canada, the United States, and Mexico are tied together through a trade agreement called CUSMA (Canada–United States–Mexico Agreement). This deal was signed a few years ago to replace the older NAFTA deal. CUSMA makes it easier for goods and services to move between the three countries without heavy taxes or barriers.

But this deal is not permanent. It is set for a review in July 2026. If the deal is not renewed, or if it changes in ways that hurt Canadian industries, it could make life much harder for businesses. Investors and traders are watching closely, and the lack of clear answers is making them nervous.

When investors do not feel sure about the future, they often avoid putting money into that country. As a result, the value of the Canadian dollar goes down.

2. Tariffs from the United States

Another factor is tariffs. Tariffs are taxes placed on goods that are imported from another country. Some U.S. tariffs on Canadian goods are still active. These tariffs make Canadian exports more expensive in the American market. Since the U.S. is Canada’s largest trading partner, even small tariffs can have a big impact.

Businesses lose profits, and workers may face fewer job opportunities when tariffs reduce sales. This lowers confidence in Canada’s overall economy, pulling the dollar lower.

3. Weak Job Numbers

Canada’s job market also showed signs of slowing down. Recent reports revealed weaker job growth than expected. Fewer jobs or slower hiring often point to a struggling economy. When jobs are weak, families spend less, businesses earn less, and the economy grows more slowly.

This weakness directly affects the currency. Investors usually prefer to hold money from countries with strong and stable job markets. When the job numbers disappoint, they pull their money out, leading to a weaker currency.

What’s Happening in the United States

Interestingly, the U.S. dollar also faced some weakness on the same day. New information came out showing that the U.S. job market was not as strong as earlier reports suggested. Revisions to labor data showed fewer jobs had been added than first thought.

This matters because the U.S. dollar is the most traded currency in the world. Even small changes in U.S. job numbers can affect markets everywhere. While this pushed the U.S. dollar slightly lower, the Canadian dollar still fell more sharply because its own economic pressures were greater.

Oil Prices Gave Some Relief

Canada is one of the world’s largest oil producers. Oil plays a huge role in the Canadian economy. When oil prices go up, Canada earns more money from its exports. This usually strengthens the Canadian dollar.

On this day, oil prices rose by 0.6%, reaching $62.60 per barrel. The increase came from rising geopolitical tensions in other parts of the world. Higher oil prices offered a little support to the Canadian dollar, preventing it from dropping even more.

But the rise in oil prices was not enough to fully balance out the fears caused by the trade deal uncertainty, tariffs, and weak job numbers.

Canadian Government Bonds

Another important detail was the movement in government bonds. The yield on Canada’s 10-year government bond rose slightly to 3.225%.

Government bonds are like loans that people give to the government. In return, the government promises to pay back the money with interest. The interest rate is called the yield. When yields go up, it can mean investors are expecting higher inflation or more risk.

In this case, the small rise in yields showed that investors were adjusting their expectations about Canada’s economy and future borrowing needs.

What This Means for Canadians

For everyday Canadians, a weaker dollar can have both good and bad effects.

Bad for Imports: Products brought from the United States or overseas become more expensive. For example, electronics, cars, or even groceries that are imported may cost more. Families may feel the pinch when shopping.

Good for Exports: On the other hand, Canadian goods become cheaper for foreign buyers. This can help Canadian companies sell more abroad, especially in industries like farming, forestry, and oil.

Travel Costs: Canadians traveling to the United States or other countries find that their money does not go as far. Vacations and shopping trips become more expensive.

Inflation Pressure: If imports cost more, inflation inside Canada can rise. That means everyday items become pricier, making it harder for families to manage their budgets.

The Bigger Picture

The Canadian dollar’s movement shows how connected the global economy has become. A decision in Washington about tariffs, or a delay in trade deal talks, can quickly affect businesses in Toronto, farmers in Saskatchewan, or oil workers in Alberta.

The uncertainty about the 2026 CUSMA review is especially worrying. If trade rules change, entire industries could be reshaped. Car manufacturing, farming, energy, and many small businesses depend on smooth trade with the U.S. and Mexico.

At the same time, the Canadian government will have to watch job numbers carefully. If employment stays weak, the central bank might be forced to make policy changes, like lowering interest rates, to support the economy. But such moves could also weaken the dollar further.

A Silver Lining

Despite the challenges, not everything is negative. Oil prices are rising, and that helps Canada. If the trend continues, the loonie may gain some strength in the coming weeks.

Also, Canada’s economy has a strong foundation. It is rich in natural resources, has skilled workers, and maintains stable institutions. Many investors still see it as a safe place to invest in the long term.

The Canadian dollar’s fall on September 9, 2025, was not just about numbers on a screen. It reflected deep concerns about trade deals, jobs, and international politics. While the drop was only 0.3%, it highlighted the bigger challenges facing Canada’s economy.

For now, Canadians will need to prepare for both the costs and benefits of a weaker dollar. Businesses may find new chances to sell abroad, but families could face higher prices at home. Policymakers will be under pressure to protect Canada’s economic future, especially as the 2026 trade deal review draws closer.