\n
\n\t\t\t\t<\/p>\n\n\t\t\t\tWhy is this making the loonie soar?\t\t\t<\/h2>\n<\/p><\/div>\n On Jan. 9 at the end of the day, the Canadian dollar was worth about USD 71.90 cents, and as of publication just before 4 p.m. Eastern on Jan. 12, it\u2019s worth about 72.10.<\/p>\n
The Canadian dollar, like most other currencies worldwide, is priced in relation to the U.S. dollar because the latter is considered the most widely-used currency in the world.<\/p>\n
\n
Story continues below advertisement<\/p>\n<\/p><\/div>\n
A stronger loonie compared to the U.S. dollar means Canadian consumers may see some benefits \u2014 such as on the price of gasoline, imports from the U.S., and potentially some food prices \u2014 but could also see challenges for exporters.<\/p>\n
Commodities like crude oil are priced almost everywhere in the world in U.S. dollars.<\/p>\n
\u201cIf the U.S. dollar were to suddenly tank because of what is happening with the Fed Reserve chair, that could push Canadian gas prices slightly lower,\u201d says Patrick De Haan, head of petroleum analysis at GasBuddy.<\/p>\n
\n
\n\t\t\tMore on Money<\/button>More videos<\/button>\n\t\t<\/p>\n<\/p><\/div>\n\u201cOil prices globally are denominated in U.S. dollars, so a weakening dollar would mean lower gas prices for Canadians and a strengthening U.S. dollar would mean increased prices.\u201d<\/p>\n
De Haan adds that Canadians may start to see somewhat cheaper gas prices this week, but geopolitical risks may offset some of those discounts if they continue to be a concern for global oil markets.<\/p>\n
\n
\n\t\t\t\t\t
\n\t\t\t\t<\/div>\n
\n
Get weekly money news<\/h2>\n Get expert insights, Q&A on markets, housing, inflation, and personal finance information delivered to you every Saturday.<\/p>\n<\/p><\/div>\n<\/p><\/div>\n
These risks include in Venezuela after the U.S. attacks and capture of\u00a0Nicol\u00e1s Maduro, protests in Iran and the potential for the U.S. to step in, as well as ongoing tensions between Russia and Ukraine.<\/p>\n
A stronger Canadian dollar may also help local businesses that want to import products if they are priced in U.S. dollars.<\/p>\n
\n
Story continues below advertisement<\/p>\n<\/p><\/div>\n
\u201cThere are some potential short-term benefits for Canadian consumers and Canadian retailers to the extent of the Canadian dollar buys more foreign goods, and bear in mind that a lot of contracts are U.S. dollar-denominated \u2014 even when they\u2019re not with U. S. vendors,\u201d says Karl Littler, senior vice-president of public affairs at the Retail Council of Canada.<\/p>\n
When it comes to exporting Canadian goods, Littler says a higher loonie compared to the U.S. dollar can actually have drawbacks because Canadian goods may cost more to some international customers.<\/p>\n
\u201cAs an export nation, the implications of a struggling export industry for the broader economy and for jobs and economic growth and so forth are such that retailers may benefit, consumers may benefit from the stronger dollar, but if Canadian exporters are getting hammered, then there may be broader economic malaise that could offset that,\u201d he says.<\/p>\n
\u201cIt\u2019s maybe a silver lining in what is a pretty cloudy economic environment.\u201d<\/p>\n
A stronger loonie may mean some costs for consumers will come down for food products that are shipped in from other nations like the United States, but it may also hurt Canadian farmers.<\/p>\n
\u201cIn the short term, it might actually mean food prices go down because we\u2019re importing a lot of fruit and vegetables over the course of the winter and paying for that in U.S. dollars as our dollar gets stronger,\u201d says Mike von Massow, a food economist at the University of Guelph.<\/p>\n
\n
Story continues below advertisement<\/p>\n<\/p><\/div>\n
\u201cOn the flip side of that, though, we are a significant exporter of food products and this will hurt farmers who are selling their products into the export market because it\u2019ll be more expensive for those importers to buy.\u201d<\/p>\n
\n
\n
\n\t\t\t\t\t
<\/p>\n\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t1:18<\/time>Powell fact-checks Trump to his face about cost of Federal Reserve overhaul<\/span>\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/p>\n\t\t\t\t\t\t<\/span>
\n
\n\t\t\t\t<\/p>\n\n\t\t\t\tWhat are the longer term risks?\t\t\t<\/h2>\n<\/p><\/div>\n\n\n\t\tTrending Now<\/span>\n\t<\/p>\n\n\n\n\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n
\n
\n\t\t\t\t\tGolden Globes 2026: The best looks from the red carpet<\/span>\n\t\t\t<\/p>\n<\/p><\/div>\n<\/li>\n\n\n\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/div>\n
\n
\n\t\t\t\t\tTrump\u2019s Florida motorcade rerouted due to \u2018suspicious object,\u2019 says White House<\/span>\n\t\t\t<\/p>\n<\/p><\/div>\n<\/li>\n<\/ul>\n<\/section>\n\u00a0<\/p>\n
\n
Story continues below advertisement<\/p>\n<\/p><\/div>\n
Central banks like the U.S. Federal Reserve and the Bank of Canada are expected to operate independently, and make their decisions based on expert assessments and data rather than political policy or partisan interests.<\/p>\n
That includes how they make decisions about interest rates.<\/p>\n
The U.S. President has been vocal in the past about his displeasure with Powell for not cutting interest rates more to boost the economy.<\/p>\n
Most central banks like the Fed and the Bank of Canada have a mandate to keep their national economies stable by adjusting interest rates as needed to maintain price stability while encouraging economic growth.<\/p>\n
Dropping interest rates prematurely risks raising inflation to levels that could make goods and services too expensive, while raising rates too quickly could make borrowing less affordable for businesses and consumers and cause a recession.<\/p>\n
This is why many economists believe central banks like the Fed need to stay independent in order to do what is best for the economy, and not for political agendas.<\/p>\n
\u201cWe need to hold that independence paramount because inflation expectations really do drive future inflation, they drive wages, they drive all sorts of things. That feedback loop between interest rates and inflation expectations \u2014 that matters in having stable and predictable inflation,\u201d says Andrew DiCapua, principal economist at the Canadian Chamber of Commerce.<\/p>\n
\n
Story continues below advertisement<\/p>\n<\/p><\/div>\n
DiCapua says the targeting of the Federal Reserve by Trump will mean more economic uncertainty.<\/p>\n
\u201cI have still a little bit of faith that other institutions will hold this administration accountable. But that being said, this is the starting of the sort of Fed independence risk premium that we\u2019re going to be facing this year.\u201d<\/p>\n
Karl Schamotta, chief market strategist at Corpay in Toronto pointed to \u201cunintended consequences\u201d of leaning on the Fed in comments to Reuters.<\/p>\n
\u201cBy trying to influence the central bank through aggressive legal threats against individual officials, the administration could drive inflation expectations higher, erode the dollar\u2019s safe-haven role, and trigger a sharp rise in long-term bond yields that raises borrowing costs across the American economy.<\/p>\n
\u201cPouring gasoline everywhere and then playing with matches tends not to work out well,\u201d he said.<\/p>\n
\n
\n\t\t\t\t<\/p>\n\n\t\t\t\tHow will that uncertainty impact you?\t\t\t<\/h2>\n<\/p><\/div>\n Along with the U.S. dollar taking a hit, the news of the DOJ honing its sights on the Federal Reserve rattled stock markets like Wall Street early on Monday, although there was a recovery by midday.<\/p>\n
\n
Story continues below advertisement<\/p>\n<\/p><\/div>\n
For those with retirement or investment portfolios, those ups and downs can be worrisome.<\/p>\n
\u201cThe initial negative reaction wasn\u2019t surprising. I think the surprising thing for myself is how quickly markets kind of recovered,\u201d says Craig Ellis, chief investment officer of Bellwether Investment Management.<\/em><\/p>\n\u201cI think over the last year and a bit, we\u2019ve seen numerous, I\u2019ll say surprise announcements that by and large haven\u2019t rattled investors and even the ones that have, markets have recovered relatively quickly \u2014 this investigation just sort of adds to that uncertainty.\u201d<\/p>\n
Ellis says that Canadians who hold investment portfolios, including for their retirements, should ensure they\u2019re diversified.<\/p>\n
This means not having too much money tied up in one or a few investment products like a stock or bond or bar of gold for instance, but instead to spread things out to better absorb any negative shocks.<\/p>\n
\u201cIf the market senses that the Fed is becoming less independent and more influenced by politics, you could actually see longer-term bond yields rise, and that\u2019s not what the U.S. needs right now,\u201d Ellis said.<\/p>\n
\u201cI think it\u2019s one of the interesting factors is President Trump feels that he can influence short-term interest rates, but he really has very little control over what happens at the longer end of the yield curve.\u201d<\/p>\n<\/p><\/div>\n
![\"\"](\"https:\/\/d21y75miwcfqoq.cloudfront.net\/70c8fc80\")
![\"Click](\"https:\/\/i2.wp.com\/media.globalnews.ca\/videostatic\/news\/esgmc0ftpc-8fgdbrna4o\/TRUMP_POWELL_VMS.jpg?w=1040&quality=70&strip=all\")