USD/CAD – Canadian dollar steady despite new US tariffs on China

The Canadian dollar has posted small gains in the Tuesday session. Currently, USD/CAD is trading at 1.3003, down 0.12% on the day. On the release front, Canada releases Manufacturing Sales. There are no major releases in the U.S. On Wednesday, the U.S publishes building permits and housing starts.

A welcome respite in the U.S-China trade spat was shattered on Monday. President Trump imposed tariffs of 10% on some $200 billion worth of Chinese goods and threatened further action if China retaliated. Unlike earlier round of tariffs, the Canadian dollar has managed to hold its own, and investors have not flocked to the U.S dollar. The reason? Investors were braced for a move by Trump, and may be sighing in relief that the tariff was set at 10% rather than at 25%. One senior economist summed up Trump’s most recent salvo as “bad but manageable”. However, if the Chinese retaliate and the U.S takes further measures, this would likely shake up the currency markets and boost the U.S dollar.

Canadian and U.S negotiators continue to insist that the sides will hammer out a new NAFTA agreement, but investors have their doubts. There are have been no three-way talks since August, and last week, a senior Mexican negotiator said that Mexico would like to conclude a three-way agreement but was prepared to advance bilaterally with the United States. Ottawa cannot afford to be left out of NAFTA, and has made concessions to open up its dairy sector to US producers. However, President Trump could squeeze further concessions out of Canada before agreeing to a deal. If the deadlock continues, the uncertainty could weigh on the Canadian dollar.

Commodities Weekly: Copper nears 15-month low as fresh tariffs announced

Seeing the forest for the trees

USD/CAD Fundamentals

Tuesday (September 18)

• 8:30 Canadian Manufacturing Sales. Estimate 1.0%
• 10:00 US NAHB Housing Market Index. Estimate 66
• 16:00 US TIC Long-Term Purchases. Estimate 65.1B

Wednesday (September 19)

• 8:30 US Building Permits. Estimate 1.31M
• 8:30 US Housing Starts. Estimate 1.24M

*All release times are DST

*Key events are in bold

USD/CAD for Tuesday, September 18, 2018

USD/CAD, September 18 at 6:35 DST

Open: 1.3041 High: 1.3065 Low: 1.3001 Close: 1.3002

USD/CAD Technical

USD/CAD posted gains in the Asian session but then retracted. The pair is slightly lower in European trade

• 1.2970 is providing support
• 1.3067 is the next resistance line
• Current range: 1.2970 to 1.3067

Further levels in both directions:

• Below: 1.2970, 1.2831 and 1.2666
• Above: 1.3067, 1.3160, 1.3292 and 1.3386

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.