USD/CAD Reacts to Trade Balance Figures & Tariff Headlines
Published June 6, 2018
USD/CAD moved to a high of 1.3066 yesterday as currency markets continue to react to headlines on trade news. The loonie has since strengthened this morning to 1.2875 at time of writing.
Rates initially moved higher after White House economic advisor, Larry Kudlow, said that US President Donald Trump was “very seriously contemplating” a different approach to NAFTA negotiations. Kudlow noted that Trump may now be seeking to create independent deals with Canada and Mexico instead of overhauling NAFTA.
Canadian officials responded in saying there would be no change in the government’s approach despite little progress after months of negotiations. Kudlow’s articulation of the Trump Administration’s new desires comes at a politically turbulent time for Canada and the US, as the two countries are in the midst of exchanging tariffs on commonly traded goods.
The loonie, however, is gaining strength this morning on news that US Treasury Secretary Steven Mnuchin had recently urged President Trump to exempt Canada from US tariffs. The Mexican peso is fairing worse as Mexican trade officials noted the country will seek to use EU sources for trade instead of the US.
Canadian trade balance figures showed a sharp improvement with a current deficit of -1.9 B versus last month’s -3.9B. US trade balance improved to -46.2B versus last month’s -47.2B.