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• USD/CAD gains traction to around 1.3855 in Friday’s early Asian session. 
• Trump signed an order raising tariff rate on Canada from 25% to 35%, the White House said. 
• All eyes will be on the US July NFP report, which is due later on Friday. 

The USD/CAD pair edges higher to near 1.3855 during the early Asian session on Friday. The US Dollar (USD) strengthens against the Canadian Dollar (CAD) after US President Donald Trump raised Canada's tariff to 35%. The US Nonfarm Payrolls (NFP) for July will take center stage later on Friday. 

The White House announced late Thursday that Trump has signed an Executive Order increasing the tariff on Canada from 25% to 35%, with the higher tariff set to take effect on August 1, 2025. Earlier, Trump criticized Canadian Prime Minister Mark Carney’s announcement that Canada plans to recognize a Palestinian state, but told reporters it’s “not a deal-breaker” in the trade talks.

The Greenback attracts some buyers in an immediate reaction to the developments surrounding US tariffs on Canada. The attention will shift to the release of the highly anticipated US NFP report on Friday for fresh impetus. US employment data for July could offer some hints about the US labour market conditions and interest rate outlook. 

On the other hand, the dovish stance of the Bank of Canada (BoC) might cap the upside for the Loonie. The BoC left its interest rate unchanged at 2.75% on Wednesday, citing resilience in the economy despite the ongoing global trade war brought on by the US. BoC Governor Tiff Macklem said after the policy meeting that the door is still open to lowering rates in the future if necessary. This might weigh on the CAD and create a tailwind for the pair in the near term.

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