If you were trying to cross the border for a summer getaway or settling up a cross-border invoice in mid-2025, you probably felt a bit of a sting. July was a rough month for the Canadian dollar. Honestly, it was a bit of a rollercoaster that mostly went downhill. While the year started with some hope that the "Loonie" might hold its ground, the USD to CAD exchange rate July 2025 told a much more stressful story for anyone holding Canadian cash.
The month kicked off with the rate sitting around 1.3644. That’s not great, but it was manageable. Then things got weird. By the time we hit the end of the month, the rate had climbed all the way up to 1.3857. That is a massive move for a single month.
What Actually Happened to the USD to CAD Exchange Rate July 2025?
Markets hate uncertainty. In July 2025, uncertainty was the only thing on the menu. The big elephant in the room was trade policy. South of the border, the U.S. was throwing its weight around with new tariff threats, and Canada was caught right in the crosshairs.
There was this whole saga with "reciprocal tariffs." The U.S. administration had been talking about a massive 35% tariff on Canadian goods that weren't strictly covered by the USMCA. When you're an economy like Canada's, which basically lives and breathes on selling stuff to the States, that kind of talk is like a gut punch to your currency value.
- Early July: The rate actually dipped slightly. On July 3rd, it hit a monthly low of 1.3573. People thought maybe the trade talk was just posturing.
- The Mid-Month Shift: Reality set in. The U.S. reached trade deals with Japan and the EU, but Canada? We were left waiting at the altar.
- Late July Surge: By July 30th, the rate broke past 1.3825.
The Bank of Canada was also in a tight spot. On July 30, 2025, Tiff Macklem and the Governing Council decided to hold the policy rate at 2.75%. They were looking at a Canadian economy that was basically flatlining. Exports had dropped by something like 25% in the second quarter. You can't really justify raising rates to save the currency when your actual industries are struggling to keep the lights on because of trade wars.
The Tariff Terror
It’s hard to overstate how much the tariff situation messed with the USD to CAD exchange rate July 2025. Yale’s Budget Lab put out a report right in the middle of the month showing that the average effective tariff rate in the U.S. hit its highest level since the 1930s.
Think about that. We were seeing 1930s-level trade barriers.
When the U.S. puts up walls, the USD usually gets stronger because it’s seen as a "safe haven." Investors get scared, they pull money out of "riskier" currencies like the CAD, and they park it in Greenbacks. It’s a classic flight to quality, even if the U.S. policy is the thing causing the chaos in the first place. Kinda ironic, right?
Why the Fed Stayed Quiet
While the Bank of Canada was dealing with a cooling economy, the U.S. Federal Reserve was stuck in "wait and see" mode. They weren't in a rush to cut rates because their inflation was still being sticky around 3.5%.
This created a "yield gap." If you can get a better return on your money in U.S. dollars than in Canadian dollars, where are you going to put your cash? Exactly. The flow of capital stayed south, keeping the USD/CAD rate elevated throughout the month.
A Quick Look at the Numbers
| Date | USD to CAD Rate | Trend |
|---|---|---|
| July 1, 2025 | 1.3644 | Starting Point |
| July 3, 2025 | 1.3573 | Monthly Low |
| July 15, 2025 | 1.3716 | Breaking Resistance |
| July 31, 2025 | 1.3857 | Monthly High |
Prose is better than a table for the soul, but those numbers matter. If you were buying a $50,000 piece of equipment from a U.S. supplier at the end of the month instead of the beginning, it cost you an extra $1,000 CAD just because of the timing. That’s a lot of poutine money.
Real World Impact: It Wasn't Just Numbers
For regular people, this wasn't just a chart on a Bloomberg terminal.
If you were a Canadian business owner, you were seeing the cost of your imported parts spike. If you were a shopper, those higher costs eventually trickled down to the price of shoes, clothes, and electronics. Yale’s data suggested that shoe prices in the U.S. jumped 39% due to tariffs; in Canada, the currency weakness added a second layer of pain to anything imported.
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Honestly, the mood in Ottawa was pretty grim. The 2025 Fall Economic Statement eventually confirmed that the unemployment rate started creeping up toward 7% around this time. The currency was a leading indicator of the broader economic stress.
What Most People Get Wrong About This Period
A lot of people think the CAD drops only when oil prices crash.
That wasn't the case here. In July 2025, West Texas Intermediate (WTI) actually climbed over 8% to finish around $69.26. Usually, when oil goes up, the Loonie goes up. But the trade war was so loud that it completely drowned out the "petrodollar" effect. The CAD became a "trade-war proxy" rather than an "oil proxy."
Actionable Insights for the Future
Looking back at the USD to CAD exchange rate July 2025, there are a few things you should keep in mind if we see these patterns repeat:
- Watch the Trade Headlines, Not Just the Oil Rig Count: In a protectionist world, trade policy trumps commodity prices. If Canada is being excluded from trade deals, the CAD will suffer regardless of what a barrel of crude costs.
- Hedging is Your Friend: If you’re a business owner, July 2025 was a lesson in why forward contracts matter. Locking in a rate of 1.36 would have saved a lot of grief by the time 1.38 rolled around.
- The 1.38 Level is a Psychological Barrier: Once the rate breaks 1.38, it often triggers "stop-loss" orders that can push it even higher, as we saw toward the end of that month.
The volatility we saw in July wasn't a fluke. It was the result of a massive shift in how the U.S. and Canada do business. While things eventually started to stabilize toward the end of 2025 and into early 2026, the July 2025 spike remains a case study in how quickly a currency can devalue when the "Special Relationship" gets a bit rocky.
Practical Next Steps:
Review your historical FX exposure from this period to identify if your business is more sensitive to trade policy or interest rate differentials. If you are currently holding USD, consider the historical resistance levels around 1.38-1.40 as potential zones for converting back to CAD, as these levels have historically been difficult to sustain without a full-blown recession.