USDCAD remains in the high 1.3100’s this morning as global trade tensions continue to weigh heavily on the loonie. The Canadian dollar is still reeling from tariffs imposed by the US on Canada earlier this month while facing continued pressure from growing risk-off sentiment brought on by US trade protectionist measures against China.
The Trump Administration announced a 25 percent tariff on 818 Chinese imports (mainly in the technology and machinery sector); these tariffs will take place on July 6 with threats of further protectionist measures on 284 additional products.
China has threatened to place a retaliatory tariff on US goods starting on July 6, with a focus on soybeans, oil and electric vehicles; in the same vein as their American counterparts, the Chinese government is also reviewing a list of further tariffs beyond the initial round next month.
The Trump Administration is seeking to resolve issues stemming from lack of market access in China and a $375 billion US trade deficit; US stocks are pointing to a lower open this morning as investors become increasingly concerned of an open trade conflict between the US and China.
In addition to global pressures, the loonie is facing headwinds from Friday’s poor data release on Canadian economic activity last month; data showed a 1.3 percent decline in manufacturing sales in Canada for the month of May.
Oil prices are moving higher this morning on speculation that OPEC may offer a smaller output hike than expected; official word from the oil cartel will come later this week as the group meets on June 22 in Vienna to finalize plans.