20 Dollars – Canada

In 2018, the Canadian economy and its currency, the Canadian dollar (CAD), were significantly influenced by external trade tensions and domestic monetary policy. The year began with a strong "loonie," buoyed by synchronized global growth and relatively high oil prices, which traditionally benefit the commodity-linked currency. However, this strength was quickly challenged by escalating uncertainty surrounding the North American Free Trade Agreement (NAFTA) renegotiations. Fears that the crucial trade pact could collapse created persistent volatility, as Canada's export-driven economy is deeply integrated with the United States.

Domestically, the Bank of Canada (BoC) played a central role. After raising interest rates three times in 2017, the BoC continued its tightening cycle with three more hikes in 2018 (in January, July, and October), bringing the key rate to 1.75%. This policy divergence from other central banks, aimed at cooling a robust domestic economy and high household debt, provided underlying support for the CAD by attracting investment. However, Governor Stephen Poloz also emphasized a cautious, data-dependent approach, often citing NAFTA risks and slowing global growth as reasons for patience, which tempered the currency's gains.

By year's end, the Canadian dollar had weakened considerably, falling from approximately US$0.81 in January to near US$0.73 in December. This decline was driven by a perfect storm of collapsing oil prices, a finalized but still uncertain USMCA trade deal (which replaced NAFTA), and a marked shift in market sentiment toward safe-haven assets like the U.S. dollar amid growing global economic fears. Thus, 2018 was a year where the loonie transitioned from early strength to late-year vulnerability, caught between domestic monetary tightening and powerful external headwinds.