USD/CAD almost at 1.3000 after breaking the triple-top on trade tensions
- The USD/CAD is trading above C$1.2990, getting very close to the round number of 1.3000.
- Tensions between Canada and the US over tariffs weigh heavily on the Canadian Dollar.
- The pair made a decisive technical move above the triple-top of 1.2920.
The USD/CAD is trading just above $1.2990, after having reached a new 8-month high of 1.2997. The pair last traded at these level back in July 2017. The primary driver of the pair is the tension about tariffs on steel and aluminum announced by US President Trump on Thursday.
The US imports a significant amount of its steel from Canada. A 25% would impede trade. After the initial announcement, Trump added that trade wars are good and easy to win. Over the weekend, Commerce Secretary Wilbur Ross clarified that no exemptions will be made, contrary to hopes north of the border.
On Monday, President Trump said that Canada would be exempt only upon a successful renegotiation of the North American Trade Agreement (NAFTA) which is currently in another round of talks in Mexico City. Canadian Finance Minister Monreau said his country is currently negotiating with a partner that has changed the terms of the discussion, voicing his complaint.
In the US, House Speaker Paul Ryan came out against President Trump by criticizing the tariffs. Ryan is a Representative from Wisconsin, where the Harley Davidson motorbikes are made. The European Union suggested retaliating by imposing tariffs on motorbikes as well as burboun. Burboun is made in Kentucky, the home state of Senate Majority Leader Mitch McConnell.
The rhetoric has been mostly adverse, weighing on the Canadian Dollar.
The Bank of Canada makes its rate decision on Wednesday amid this atmosphere. Canada releases its jobs report on Friday. In the US, the ISM Manufacturing PMI came out at 59.5 points, slightly above expectations. The US will also publish its jobs report on Friday.
USD/CAD technical levels
The pair broke above 1.2920, a line that was a top three times during 2017. The move above this line sent it to the highest levels in eight months. The round level of 1.3000 is an important psychological barrier. 1.3080 served as support in the past and may turn into resistance. 1.3180 is next.
Below, 1.2920 now switches to support. It is followed by 1.2810, a support line seen on March 2nd. Further below, 1.2780 provided support to the pair when on February 28th.