The Canadian dollar is rising as one analyst suspects Donald Trump is ‘engineering’ the greenback’s decline

The recent greenback angst has since boosted the Canadian dollar past where it started the year. Photo by Peter J. Thompson/National Post/Postmedia files

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The American dollar continued to plummet against other currencies on Tuesday, leaving one currency expert to wonder if the United States administration is looking to devalue the greenback on purpose.

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“There are good reasons to suspect that the Trump administration is deliberately engineering a decline in the dollar’s value on foreign exchange markets,” Karl Schamotta, chief market strategist at Corpay Inc., said in a note on Tuesday. “Policy actions over the last year have not been consistent with making the greenback great again.”

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Prior to taking office last year, President Donald Trump, J.D. Vance, Scott Bessent and others indicated that a strong U.S. currency wasn’t good for business.

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Schamotta said the noise around the “debasement trade” — the devaluing of the U.S. dollar — has risen to cacophonous levels, however the technical signs to back up the trade are absent.

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For example, U.S. Treasury yields and inflation expectations are “stable” and capital continues to flow into U.S. denominated assets, he said, adding the U.S. dollar entered 2026″overvalued.”

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Either way, the greenback is off to a rough start — a weakening that analysts say could portend more upside for the Canadian dollar in the coming months.

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“(U.S.) dollar sentiment is taking a beating,” Shaun Osborne, chief currency strategist at Bank of Nova Scotia, said in a note on Monday, as a “sell America” or “hedge America” theme buffets the currency.

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Osborne observed that the trajectory of the American dollar is “oddly” echoing the early months of the second year of Trump’s first term, when the U.S. dollar index, which measures the greenback against a basket of other currencies including the euro, Canadian dollar and the Japanese yen, fell five per cent between mid-January and mid-February 2018. Since mid-January 2026, the index has fallen by 2.5 per cent.

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“Loss of support at 97.75 points to more weakness for the index and puts major support at 96.20 at risk of a retest (at least),” Osborne said.

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The U.S. dollar index fell below 97.75 late last week and then fell to 96.5 on Tuesday.

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The loonie has experienced extreme volatility so far in 2026, opening the year at 72.9 U.S. cents only to plummet 1.4 per cent to hit a 2026 low on Jan. 16.

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But the recent greenback angst has since boosted the Canadian dollar past where it started the year.

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Osborne thinks the Canadian dollar’s rise will be more muted than that of other peers — such as the Australian dollar, which rose again Monday after gaining three per cent last week on its critical minerals strength — due to “flat” oil prices.

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For now, the loonie is at the mercy of the greenback.

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“We expect the general trend in the USD to remain the primary influence on the CAD’s performance,” Osborne said.

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What’s behind the U.S. dollar selloff? Factors weighing on the greenback include weakened U.S. Federal Reserve autonomy, over-priced stock markets and splintering global alliances, Osborne said.