Market Moves on US Tariff Announcement; Canada Awaits GDP Numbers
Published March 2, 2018
US President Donald Trump announced tariffs on aluminum and steel imported into the United States yesterday; Trump’s planned trade protectionist measures would impose 25 percent tariffs on foreign steel, and a further 10 percent tariff on all aluminum imports.
US equities and the Canadian dollar fell sharply yesterday on this news, as fears that the Trump administration’s decision could provoke a trade war unsettled markets; Canada accounts for 16 percent of steel imports in the US.
Canada’s International Trade Minister Francois-Phillippe Champagne deemed the tariffs as “unacceptable”; Trudeau’s government commented that their team will seek an exception to these tariffs in order to protect Canadian workers from a severe slowdown in production and a possible dumping of steel products in Canada by other nations affected by the ban.
USD/CAD reached as high as 1.2895 yesterday, however, moved lower near the 1.2800 handle by the end of the day. Improving oil prices, which ended a three-day losing streak for the commodity, helped provide some respite to the loonie.
The new Federal Reserve chair, Jerome Powell, tempered hawkish sentiment in his testimony to the Senate Banking Committee yesterday; Powell noted that he did not see much evidence of strong wage growth in the US and nor did he see any evidence of an overheating US economy.
The Canadian dollar faces another trial today with the release of GDP data at 8:30 AM EST. The Bank of Canada will look for sustained growth out of the Canadian economy as a gauge on when to raise interest rates next.