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Photo by Brent Lewin/BloombergThe Canadian dollar was heading for its worst day against the United States dollar in more than two months after trade talks between the two countries collapsed.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorThe loonie fell as much as 0.6 per cent to $1.3844 versus its U.S. counterpart, leading losses against all Group-of-10 currencies and on course for its worst performance since June 17. Selling could extend, as Washington’s latest 50 per cent tariffs on billions of dollars of Canadian goods threaten an economic pickup expected in the coming months, according to market watchers.Prime Minister Mark Carney’s pledge to match U.S. duties “dollar for dollar” poses a further risk to investor confidence, said Derek Halpenny, head of research, global markets EMEA at MUFG, which forecasts the loonie sliding to $1.41 per U.S. dollar in the third quarter. “Downside risks will intensify the longer there is no resolution to this escalating trade war,” he noted.SUBSCRIBER EXCLUSIVE: FP West: Energy Insider brings you behind the oilpatch’s closed doors with exclusive insights from insiders every Wednesday morning.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of FP West: Energy Insider will soon be in your inbox.We encountered an issue signing you up. Please try againIt marks a sharp turnaround for the currency, which had rallied since late June. Positioning in the Canadian dollar suggests the latest bout of selling has room to continue, according to CFTC data. Hedge funds have steadily trimmed bets on the loonie weakening over the past month after bearish positions hit a two-year high in late July, leaving scope to rebuild those wagers.While swaps markets are pricing for around 70 basis points of interest rate hikes in Canada through June, a pullback in these expectations would keep the currency under pressure in the near term, said Elias Haddad, global head of markets strategy at Brown Brothers Harriman.An escalating trade war would likely ease expectations for Canadian rate hikes in the coming months, but at the same time, Haddad pointed out that the risk of easing expectations for U.S. interest rate hikes “should limit USD/CAD overshoots beyond 1.4000.” Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.