Newsletter · · Ashutosh Agarwal

Oil at $100 Meets 50% Tariffs on Canada - Commodity FX - Week of July 25, 2026

Commodity FX brief for the week of July 25, 2026, drawing on investor and operator podcasts from July 17 to 24. Trump's targeted 50% tariffs spare the oil and minerals that drive the loonie, while a two-front oil spike back above $100 hands Canada and Norway a windfall that a firmer US dollar and a possible Fed hike are working against.

Commodity FX

Week of July 25, 2026: Oil at $100 Meets 50% Tariffs on Canada

Two things happened to Canada this week, and they pull the loonie in opposite directions.

The first is loud and scary: President Trump signed off on 50% tariffs on a list of Canadian goods, and the headlines wrote themselves. The second is quieter but arguably bigger for the currency: oil punched back above $100 a barrel for the first time in months, as the fight with Iran spread to a second shipping chokepoint. One of those is bad for Canada. The other is very, very good for it: Canada is an oil exporter, and when oil goes up, the country earns more. So the Canadian dollar spent the week caught between a political punch and a commodity windfall.

That tension, a commodity boom running straight into a strong-dollar, higher-rates backdrop, is the whole story this week, and it touches every currency in this letter. It was a heavy week for Canada and for oil, and a genuinely rich one for the exporter-currency world in general. It was also a quiet week for some corners: nobody serious talked about the Australian dollar, the Swedish krona, or the Mexican peso as trades. Where a thread went silent, we say so instead of padding it.

TL;DR

  • Trump hit Canada with 50% tariffs, but the fine print matters enormously for the loonie. The tariffs spare the things that actually drive the Canadian dollar. Oil: exempt. Critical minerals: exempt. Potash and fish: exempt. A University of Toronto economist figures the move covers only about 5.5% of Canada's exports and is "not going to move the needle much" for the overall economy.
  • Oil ripped back above $100. Brent touched $100 and WTI (the US benchmark) climbed more than 30% in July as Iran-backed Houthi fighters attacked Saudi oil tankers, opening a second front on top of the still-closed Strait of Hormuz. A Canadian energy fund manager says Middle Eastern production is "down at least 6 million barrels per day."
  • That oil spike is a double-edged sword for the whole bloc. Higher oil means more income for Canada and Norway, but it also stokes US inflation, and the odds of the Fed hiking rates next week just doubled. A stronger dollar and higher US rates are the standing headwind for every currency here.
  • Copper is sitting near record highs, with one well-known forecaster calling for $7 a pound by year-end. It's the closest thing to an Australia read this week, because nobody discussed the Aussie itself.
  • New Zealand's dairy engine is running hot, milk is fetching a historically high $9.50 per kilo in New Zealand dollars, even as Fonterra rewires its entire export strategy to fight Chinese competition.
  • A rare word on Norway: Equinor's CEO laid out just how central Norway is to Europe's gas, and why the Norwegian state, not the company, pockets most of any price spike.
  • Still silent: the Australian dollar, the Swedish krona, the Mexican peso, and any direct call on China's yuan.

What's New

The Canada tariff shock is loud, but it deliberately misses the loonie's engine. This was the week's noisiest headline. On Squawk Pod (Jul 21), U.S. Trade Representative Jamieson Greer, the administration's top trade official, confirmed the mechanics: three proclamations under Section 338 of the Tariff Act of 1930 (a dusty 1930s law that, as CNBC's Eamon Javers noted, "hasn't been used to enact tariffs" before and will likely be challenged in court), slapping 50% duties on a targeted list of Canadian goods "ranging from wine to hockey sticks to cement," taking effect 30 days after signing. Crucially, Greer said they apply "whether or not those goods are compliant with USMCA," the North American trade deal, which is a signal Washington is willing to blow past that agreement. His stated reason: "Of all the countries who retaliated against the United States, one was the People's Republic of China and the other was Canada," pointing to Canada banning U.S. liquor, capping auto imports, and limiting U.S. dairy access. This is operator and official commentary, the man running U.S. trade policy. Tellingly, Greer was heading to Mexico that same week to negotiate, which Javers read as Washington being "far more eager for a trade deal with Mexico than with Canada."

Now here's the part the scary headline buries, and it's the part that matters for the currency. On Hub Podcasts (Jul 21), University of Toronto economics professor Joseph Steinberg ran the numbers within 24 hours of the announcement and came back with a shrug. The tariff, he calculates, covers "something like 5.5 percent of our exports" that were previously tariff-free, raising Canada's average effective tariff by "something like 2.5 percentage points." And critically: "This 50 percent tariff does not stack on top of the existing sectoral tariffs on steel, aluminum, and auto. Oil, completely exempt. Critical minerals, completely exempt." His bottom line on the wider economy: "I don't think we should be prepared to see anything material... this additional 5 percent is at the margin, not going to move the needle much." Expert view. Breaking Points (Jul 22) confirmed the exemption list, energy, potash, fish and critical minerals all carved out, and noted Prime Minister Carney's response was "firm but moderate," with talks still open.

Why does this matter for the Canadian dollar specifically? Because the loonie floats on oil and resources, and those are exactly what got spared. A 50% tariff on hockey sticks is painful for hockey-stick makers, but it doesn't touch the barrels of crude and the critical minerals that earn Canada its foreign income. The market read the headline; the currency traders read the fine print.

Not everyone thinks it's a nothing-burger, though. For the other side, listen to former Canadian finance minister Chrystia Freeland on Balance of Power (Jul 24). She pegged the hit at "about $20 billion worth of goods, that's not a killing blow for the Canadian economy, but it is significant." And she rejected the comforting idea that this is just tough-love negotiating: "It shows that Donald Trump wants to punish Canada." Her frustration was that Canada has bent over backwards already, "Canada has been ready, willing, and able to negotiate any place, any time," she said, noting Canada dropped its digital services tax last year and rolled back most of its earlier retaliation. Operator view, a former official who sat in the room. Columnist Andrew Coyne, on The Munk Debates (Jul 24), added that Trump's tariff commitment looks "ideological rather than fiscal," it won't meaningfully dent U.S. deficits (running around 6% of the economy), because the tariffs shrink the very trade they tax. Pundit opinion. The honest read: the numbers say this is a manageable, targeted shot; the politics say the Canada-U.S. relationship is getting genuinely nasty, and that uncertainty is its own drag on the loonie.

"Oil, completely exempt. Critical minerals, completely exempt." Joseph Steinberg, University of Toronto, on what the Canada tariffs don't touch

Oil smashed back through $100, and this time it's a two-front problem. This is the week's biggest driver for the petro-currencies (the Canadian dollar and Norwegian krone, which rise and fall with crude). On Squawk Box Europe Express (Jul 24), the hosts watched Brent oscillate right around the round number, "it was 99.99 a second ago, now it's 100.2," after jumping 7% in a single day. The U.S. benchmark, WTI, "climbed over 30% in July... nearing a 40% gain for the month." The trigger: Iranian-backed Houthi fighters attacked Saudi oil tankers in the Red Sea, near a chokepoint called Bab al-Mandeb. That's the second front. The first, the Strait of Hormuz, the narrow gateway for a huge share of the world's oil, has been "effectively closed" for months. Saudi Arabia had been routing around it via an east-west pipeline to a Red Sea port, moving roughly 5 million barrels a day. Now that backup route is under attack too. As the show put it, with both chokepoints threatened, you've shut off "really the only way you can get waterborne crude out of the entire Gulf region." One guest, Josh Young of Bison Interest, warned that if this persists, oil could retest its 2008 highs "up near $150 a barrel," even "$200 a barrel and beyond" adjusted for inflation. Operator view.

For the numbers behind the fear, the most useful voice was Eric Nuttall, a senior portfolio manager at Canada's Ninepoint Partners, an energy-focused fund, so very much an insider, on Power Lunch (Jul 23). His key figure: "Middle Eastern production is down at least 6 million barrels per day," and getting worse. He explained the plumbing that keeps prices high even when barrels technically exist: the only way to make up lost production is to drain storage tanks, and to drain tanks you need tankers, "and we're not getting them." The Omani channel was "seemingly mined," the Houthi strikes add "roughly eight weeks" to the average voyage for the big crude carriers now forced around via Suez, and Kazakhstan just lost half a million barrels a day when a key export terminal stopped loading. His verdict on a market that had been shrugging all this off: what we're seeing is "a bridging of perception and reality." Operator view.

But how high, and for how long? The producers are more sober than the headlines. On Energy News Beat (Jul 23), Texas oil producer RT Trevino of Pecos Operating Company gave the operator's-eye view. He confirmed the move, Brent over $100, WTI leaping "from $81 to $91" in two days, refineries running flat-out at 96% utilization, and noted the physical market (real barrels, not paper contracts) is already trading around $130. But he pushed back on the doomiest calls: "If we see a spike to 110 and maybe 15, that's the top. Then you're going to see demand destruction start." In plain terms: at some price, people simply buy less oil, and that caps the rally. "I don't see [it] going over 115 for very long," he said, adding that heavy U.S. production is "the only reason we're not seeing $150 oil." Operator view. Fellow energy analyst Josef Schachter, on The KE Report (Jul 18), was even calmer, forecasting WTI averaging around $80 in the fourth quarter and $90 next year, with a $65 floor set by U.S. shale economics.

The one voice on Canadian crude specifically came from an unlikely place. Energy analyst Rory Johnston of Commodity Context, on Palisades Gold Radio (Jul 17), gave the single most technical and useful read of the oil whipsaw, and he happens to watch Canadian barrels closely. He described a market that in June briefly flooded into a "mini glut" (more than 20 million barrels a day surging out of Hormuz on some days, into weak Chinese demand), then violently reversed. His tell is the "time spread," whether spot oil trades at a premium (a sign of tightness) or discount (a sign of glut). "I've never seen us go between $2 backwardation down to contango, and then back up to $2 backwardation in the span of a month," he said, a level of chaos he called unprecedented in his career. The Canada-specific detail: Western Canadian Select, the heavy crude Alberta sells, saw its discount to the U.S. benchmark blow out from about $3 to about $9 (very weak) during the glut, before tightening again as the market flipped. Expert view. The read for the loonie: Canadian crude was genuinely weak a few weeks ago, and this violent snap-back to tightness is a real, if jumpy, tailwind.

Copper is the closest thing to an Aussie read, and it's near record highs. With no one discussing the Australian dollar or iron ore directly this week, copper is the stand-in for "how's global industrial demand and the resource cycle doing." The answer: hot. On The Contrarian Capitalist (Jul 22), copper was pegged at $6.48 a pound, up 3.6% on the week and near all-time highs, helped short-term by mining weather disruptions in Chile and Peru and long-term by electrification demand against dwindling supply. Economist Nomi Prins, speaking at a resource conference on Soar Financially (Jul 22), made the sharper call: copper touched about $6.71 a pound in May, is now around $6.30-6.40, and "we predict it will be at 7 by the year end because there is a physical structural shortage in copper relative to demand." Her supporting point is neat, copper "held in" even as gold and silver sold off, simply because copper is harder to dump via paper trades, which makes it a cleaner read on real supply and demand. Expert and pundit view. The read-through for Australia is positive on the resource cycle, we just have to infer it, because the Aussie itself went unmentioned.

New Zealand's dairy machine is running hot, and Fonterra is retooling. No one discussed the New Zealand dollar or its central bank directly, but dairy is New Zealand's export lifeblood, and the picture there is genuinely strong. On The Milk Check (Jul 21), industry analysts pegged the New Zealand milk price at "$9.50 per kilo in New Zealand dollars, which is a historically pretty high milk price," while U.S. farmers sit near the low end of their range. New Zealand's milk output is growing about 4-5% this year, and a striking share of that comes from importing palm kernel expeller (a cheap feed byproduct); those imports jumped 20-30% once Fonterra, the dominant New Zealand dairy co-op, lifted old limits. Expert and operator view. The bigger strategic story: Fonterra is deliberately walking away from plain whole-milk powder, where China now competes hard, having ramped its own imports from 500,000 tons before COVID up to 800,000 and back down to 500,000, and remaking itself into "a skim, protein and fat company," pushing higher-value products into Southeast Asia. For the kiwi, this is a supportive terms-of-trade backdrop hiding in plain sight, even without a single word on the currency itself.

A rare, genuine look at Norway, from the top of Equinor. The Norwegian krone almost never gets airtime, so it's worth flagging Equinor CEO Anders Opedal on Cleaning Up (Jul 22), an operator and insider, running the company. He laid out Norway's outsized role: the country produces about 120 billion cubic meters of gas a year, "about one-third of the demand in Europe," and Equinor alone supplies "40% of the demand for natural gas in Europe," with 90-95% of its crude going to Europe too, having largely replaced Russian barrels. Operator view. But here's the twist that matters for the currency, and it's a subtle one: Opedal noted Norway taxes gas production at 78%. So when the gas price doubles, Equinor's pre-tax revenue roughly doubles, but "most of the money will go to the government." In other words, an oil-and-gas spike like this week's is a windfall largely for the Norwegian state (and by extension its giant sovereign wealth fund), more than for the listed company. It's a reminder that the krone's link to energy runs through the government's coffers as much as through corporate profits.

The Debate

The real argument this week isn't a simple bull-versus-bear on any one currency. It's a genuine crossfire, and it lands hardest on the loonie: the same oil spike that should lift the commodity currencies might end up hurting them, by way of the U.S. dollar.

The bull case (commodity windfall). This one is loud and well-supported this week. Oil is back over $100, with a real supply crunch behind it (Nuttall's 6 million barrels a day offline, the two-front chokepoint problem). Copper is near records with a credible path to $7. New Zealand's dairy income is historically high. All of that is a straightforward terms-of-trade boost for exporters, they earn more for what they sell, which, all else equal, is good for the Canadian dollar, the Norwegian krone, and the kiwi. And for Canada specifically, the scary tariff turns out to spare oil and minerals entirely, while the country doubles down on becoming an energy superpower.

The bear case (the dollar and the Fed spoil the party). Here's the catch, and it came through most clearly from FX strategist Marc Chandler of Bannockburn Global Forex on The KE Report (Jul 24). Expensive oil doesn't just help oil exporters, it also pushes up inflation everywhere, including in the United States. And that changes what the Fed does. "The market has increased the likelihood that the Federal Reserve hikes rates next week," Chandler said, the odds "more than doubled this week... because of the higher oil prices," from roughly a one-in-six chance to about one-in-three. On top of that, U.S. jobless claims just came in "the lowest since 1969," making the American economy look bulletproof. The result was a global bond sell-off, U.S. long-term rates are up about 50 basis points (half a percentage point) this year, and this week rose faster than most peers. Operator view. Higher U.S. rates and a firmer dollar are the classic weight on every currency in this letter. That's exactly why the loonie was actually down on the week, the crew on The Loonie Hour (Jul 17) noted the Canadian dollar was "down two cents," even with oil ripping. The commodity tailwind got overwhelmed by the tariff cloud and the strong-dollar undertow.

So the honest picture: this is a real two-sided fight, and the referee is the U.S. dollar. If the oil spike fades and the Fed stands pat, the commodity story wins and the bloc gets to breathe. If oil stays hot and drags the Fed toward an actual rate hike next week, the dollar tightens its grip and the exporter currencies stay pinned no matter how good their terms of trade look. The next real test is the Fed's meeting next week, the same event Chandler is watching.

Trades in Play

We only flag this section when the podcasts genuinely point to an actionable idea, and this week the clean currency trade that showed up last week (a desk shorting the Australian dollar against the Brazilian real) had no successor, the FX desks stayed quiet on this bloc. So we won't manufacture one.

What did surface were conviction views one layer removed from the currencies, in the commodities that drive them:

Long energy, and don't fight the tightness. Ninepoint's Eric Nuttall on Power Lunch (Jul 23) has spent months arguing the oil market was "too complacent," and he thinks reality is now catching up to a genuine 6-million-barrel supply hole. That's an energy-long stance, and by extension a constructive one on the petro-currencies' terms of trade, with the obvious risk that a sudden de-escalation with Iran deflates the whole premium. Operator view.

Own the structural copper shortage. Nomi Prins on Soar Financially (Jul 22) is looking for $7 copper by year-end and hunting junior copper developers as takeover targets. It's a resource-cycle bet, and the tidiest available proxy for an Australia view in a week when no one voiced one. Expert view.

Neither is a currency trade per se. If you want the FX expression, it's simply this: the oil-and-copper strength argues for the exporter currencies' fundamentals, while the Fed and dollar channel argues against their spot prices, and this week the dollar won.

Read-throughs

  • WTI / Brent + Canadian energy (CNQ, SU, ENB): the strongest read in the letter. Brent back over $100, WTI up 30-40% in July, roughly 6 million barrels a day of Middle East supply offline (Power Lunch, Jul 23; Squawk Box Europe Express, Jul 24), and, importantly, Canadian oil is specifically exempt from the new tariffs (Hub Podcasts, Jul 21). Canadian heavy crude (WCS) has snapped from a weak $9 discount back toward tightness (Palisades Gold Radio, Jul 17). Nobody named CNQ, Suncor or Enbridge specifically, so this is a strong read on the commodity, with the currency caught between it and the tariff noise.
  • Iron ore + BHP / Rio / Fortescue: silent again. No iron-ore price call, no China-steel demand read, no word on the big miners or the Australian dollar. Copper is the only Australia-adjacent signal, and it's bullish.
  • Copper: near all-time highs at roughly $6.48 a pound, with a $7 year-end call from Nomi Prins (Soar Financially, Jul 22) and a "no-brainer" deficit call from Steve Hanke on Palisades Gold Radio (Jul 21). Short-term weather help from Chile and Peru; long-term electrification demand. Constructive.
  • Equinor / Norway / NOK: a genuine read this week. Equinor supplies ~40% of Europe's natural gas and ~one-third comes from Norway overall (Cleaning Up, Jul 22). The energy spike is a fiscal windfall for the Norwegian state (78% production tax), which flows to the sovereign wealth fund more than to the company, a slow, structural krone positive rather than a trading catalyst. No Norges Bank commentary.
  • New Zealand / NZD: indirect but supportive. Milk at a historically high $9.50/kg (NZ dollars) and Fonterra moving up the value chain (The Milk Check, Jul 21). No RBNZ or direct kiwi call.
  • The yuan as a China proxy: soft. The only China color was that Beijing has been leaning on its strategic oil reserves and had lost its discounted Iranian and Venezuelan crude (Energy News Beat, Jul 23), plus its dairy imports plateauing (The Milk Check, Jul 21). No direct call on the currency or the central bank.
  • MXN / Banxico: no FX or rate view. The only Mexico angle was trade-structural: the U.S. is further along negotiating with Mexico than with Canada (Squawk Pod, Jul 21), and 40% of the value of Mexican exports to the U.S. actually originates in America (The Brookings Current, Jul 17). Read that as: Mexico may fare better than Canada in this tariff round.
  • Swedish housing / banks / SEK: silent. Nothing this week.
  • The China growth cue: cautious. China halved its crude imports and drained reserves to keep fuel cheap while it waited out the Iran conflict; its dairy demand has flattened. No reflation bull case was made.

What Changed

Three things genuinely shifted versus recent weeks.

Canada roared back to the center of the story, but the tariff is smaller than it sounds. For weeks the loonie was an afterthought; this week it was the headline, twice over. The key insight is that the 50% tariff, terrifying on the surface, carves out oil, critical minerals, potash and fish, and by one credible estimate touches only ~5.5% of exports, "not going to move the needle much" for the economy. The bigger genuine change for Canada is arguably the domestic energy build-out: on The Loonie Hour (Jul 17), the panel described Ottawa, Alberta and Ontario lining up behind a major new pipeline, with both governments motivated to add 2.3 million barrels a day to fill it, a structural, multi-year positive for Canada's export income.

Oil went from "mini glut" to genuine crisis in a matter of days. Only three weeks ago the oil market was briefly oversupplied, and Canadian heavy crude was trading at its weakest since before the war. This week it flipped hard, Brent back over $100, a second shipping chokepoint under fire, and 6 million barrels a day offline. That's a real terms-of-trade swing for both Canada and Norway.

The Fed threat inverted. Last week the debate was whether the Fed might cut after soft inflation data. This week, thanks to the oil spike and a red-hot jobs number, the market is pricing a rising chance the Fed hikes next week. That flips the dollar backdrop from "maybe easing" to "maybe tightening," which is why the loonie fell despite the oil boom, and why the whole bloc is on the back foot into next week's Fed meeting.

What didn't change: the U.S. dollar is still the boss of this bloc; China is still soft; and Australia, Sweden and Mexico still aren't getting any real airtime.