How do FX risk strategies differ between Canada and the US?

It’s a challenging time for North American businesses. From currency fluctuations to trade disruptions, the landscape is evolving rapidly—and often unpredictably. For years, FX risk was seen as a background issue, quietly managed by treasury teams while the rest of the business focused on more pressing priorities.

But that’s changing.

Corporates across North America are quickly realising they can no longer afford to be passive as unhedged FX exposure erodes profits. In this blog, we’ll explore the key differences in how Canada and US firms are managing the FX risk that threatens their bottom lines, based on our 2025 North America Corporate FX Report.

 

Quick insights:

• Canada demonstrates greater commitment to FX hedging: 97% of Canadian firms hedge FX exposure compared to 88% in the US, often using higher hedge ratios and longer tenors.
• Tariff pressures prompt operational shifts: 96% of Canadian firms have adjusted operations in response to tariffs vs. 83% in the US—despite being more heavily impacted.
• Regional FX challenges vary: US firms struggle with fragmented service provision (38%), while Canadian firms focus on demonstrating best execution (36%).
• Differing reason for outsourcing: 40% of Canadian firms are outsourcing FX functions to access specialised expertise, while 30% of US firms are outsourcing to enhance scalability and operational flexibility.
• AI adoption gains momentum: 46% of US firms are exploring AI for process automation, while 44% of Canadian firms are considering its use specifically for FX operations.

 

In this blog:

• How are Canadian firms leading the way with FX risk management?
• How have tariffs impacted business in Canada and the US?
• What’s driving the FX strategy divide between the US and Canada?
• Are automation and AI the future of corporate FX strategy?

 

How are Canadian firms leading the way with FX risk management?

FX risk management is rapidly moving up the corporate agenda across both Canada and the US. Yet it's Canadian businesses that are taking the lead, embracing a more strategic and forward-thinking approach to navigating currency volatility.

But how exactly do their strategies differ from those of their US counterparts?

Higher hedging activity

97% of firms in Canada are hedging their FX exposure, compared to 88% in the US, highlighting a stronger focus on protecting their bottom lines against currency volatility.

More aggressive hedging

On average, Canadian firms hedge 57% of their currency exposure, significantly higher than the 47% hedged by US businesses.

Longer hedging tenors

Canadian corporates are not only extending hedging tenors more frequently (71% vs. 61%) but are also hedging for longer periods on average—13 months compared to 4.81 months in the US. This indicates a strategic focus on long-term stability versus short-term speculation.

Increased hedge ratios

Canadian firms are boosting their hedge ratios more frequently (36% vs. 31%) whilst US firms are more likely to reduce their hedge ratios (37% vs. 25%), a decision that may leave them more exposed to market fluctuations.

Whether it’s through raising hedge ratios, extending tenors, or covering a greater share of their FX exposure, Canadian corporates are taking decisive steps to shield themselves from currency volatility and build stronger financial resilience. For US corporates, this presents a timely opportunity to reassess existing hedging strategies and adopt a more proactive, forward-looking approach, to stay competitive in an increasingly unpredictable FX landscape.

 

How have tariffs impacted business in Canada and the US?

Tariffs have emerged as a disruptive economic force in 2025, dominating headlines and fuelling volatility across global markets. President Trump’s assertive trade actions began with targeted measures on Chinese goods, quickly expanding to include imports from Canada and Mexico. The market’s response was swift and severe—on March 10, the S&P 500 dropped 2.7%, wiping out nearly $4 trillion in value in a single day.

As one of the earliest targets of these new tariffs, it’s no surprise that businesses in Canada are feeling the impact more acutely than their US counterparts. Here’s a closer look at how tariffs are affecting Canadian firms compared to those south of the border:

Profitability & competitiveness

71% of businesses in Canada say tariffs have significantly hindered their profitability or global competitiveness, compared to 69% in the US

Hedging strategies

Canadian firms plan to increase hedge ratios and durations in response to tariffs, compared to US firms.

Currency risk concerns

In Canada, 43% of firms cite both policy-driven currency fluctuations and unpredictable market movements as their top concerns.

US firms, on the other hand, adopt a more cautious approach, with 38% prioritising counterparty risk in hedging as well as delaying major decisions due to uncertainty.

Optimism for the future

Despite the challenges, 89% of businesses in Canada remain optimistic about how tariffs will impact their operations and strategies over the next 12 months, compared to 81% of US firms.

Strategic operational adjustments

96% of firms in Canada have adjusted sourcing or manufacturing strategies due to tariffs, significantly higher than the 83% reported by US firms.

 

What’s driving the FX strategy divide between the US and Canada?

How do day-to-day FX operational challenges differ for firms in the US and Canada?

Navigating foreign exchange operations continues to pose critical challenges for businesses across North America. While both US and Canadian firms face a range of pressures, the nature of these challenges differs by region.

In the US, the fragmentation of service provision stands out as the most pressing issue for 38% of businesses, indicating that many firms are grappling with the challenge of coordinating across multiple liquidity providers or platforms to meet their FX requirements. While platforms that integrate counterparty diversity within a single solution can streamline operations and mitigate this issue, many businesses may be unaware that such consolidated solutions exist.

In Canada, the emphasis shifts toward demonstrating best execution, a concern for 36% of respondents. This reflects growing pressure from both internal stakeholders and regulators to ensure transparency and robust pricing justification in FX transactions. For firms relying on a single liquidity provider, demonstrating best execution becomes particularly challenging. However, this challenge can be addressed by comparing FX rates across multiple providers and implementing regular Transaction Cost Analysis (TCA) reporting to evidence that best execution standards are being met.

 

 

Why are corporates in the US and Canada outsourcing FX processes?

Outsourcing FX processes is on the rise, with 100% of surveyed firms now outsourcing at least some part of their FX operations.

From onboarding multiple counterparties to managing the entire end-to-end FX workflow, businesses are increasingly recognising the strategic advantages of outsourcing:

• 30% of US corporates are outsourcing their FX processes to gain greater scalability and flexibility in their operations.
• 40% of corporates in Canada are outsourcing FX to gain access to specialised expertise.

So why are businesses increasingly turning to FX outsourcing now?

It seems there is growing recognition that outsourcing FX operations offers significant advantages, and when done with the right partner, it no longer means a loss of control. By delegating complex tasks to specialised providers, firms can streamline operations, focus on their core business, and drive growth.

 

 

Are automation and AI the future of corporate FX strategy?

Where are US and Canadian corporates focusing their automation efforts?

The automation journeys of US and Canadian corporates show similar enthusiasm but different focus areas:

• 36% of US firms are considering automating price discovery.
• 38% of firms in Canada are considering automating FX reporting.

For US corporates, it’s no surprise that price discovery is a top priority, with % still struggling to obtain comparative FX quotes. US firms are increasingly adopting web apps to manage transactions, with 42% already leading the way. Multi-bank platforms are leading the charge, letting businesses compare quotes from multiple liquidity providers while automating the process. For those still stuck on manual uploads or phone calls, it may be time to upgrade—or risk falling behind.

For Canadian corporates, ongoing FX volatility and rising costs are making it increasingly essential to track every FX-related transaction—from trades to payments and receipts—with precision. Accurate and timely reporting isn’t just about compliance; it’s also about making smarter decisions and being able to demonstrate best execution. Yet, for many firms, this remains a tough nut to crack.

 

 

What role will AI play in the future of FX strategy?

AI is no longer just a buzzword for North American corporates, it’s becoming a key part of their FX strategy. All firms surveyed are actively exploring how AI can improve their operations, with priorities varying by region:

• 46% of US corporates are considering using AI for process automation
• 44% of Canadian corporates are considering using AI for FX operations

As FX environments become more complex, firms are increasingly looking for faster, smarter, and more scalable ways to manage FX workflows—and AI is quickly emerging as a powerful enabler of that transformation.

 

Simon Lack, Head of Risk Advisory at MillTech, shares his insights into the drive towards AI for smarter FX risk management:

"We’re seeing strong demand for tools that help with hedge scenario modelling and cost attribution, especially as CFOs look for more transparency and control in their FX strategies. These tools make it easier to test different market scenarios, understand the potential impact of hedging choices, and track trading costs more accurately across portfolios. That kind of insight helps finance leaders make smarter decisions and drive better outcomes for their business."

 

Please refer to our Research Disclosure Page for more information on the data referred to in the above.