USD/CAD has edged upwards in the Tuesday session. Currently, the pair is trading at 1.3030. On the release front, there are no Canadian events on the schedule. In the US, we’ll get a look at PPI and Janet Yellen testifies before Congress on the semi-annual Monetary Policy Report. If Yellen reiterates that the Fed plans several rate hikes this year, the US dollar could make gains. On Wednesday, the US releases retail sales and CPI reports, and Yellen will continue her testimony before the US Senate.
Canadian Prime Minister Justin Trudeau jetted back to Ottawa after meeting President Trump in Washington on Monday. It was "mission accomplished" for the Canadian leader, who was looking for reassurances from Trump that he would not tear up NAFTA, the trade agreement which is the bedrock of the trade relationship between the two countries. After the leaders met, Trump said his biggest concern with NAFTA was with Mexico rather than its northern neighbor. Trump stated that the US has a "very outstanding trade relationship with Canada. We’ll be tweaking it." Although Trudeau could do without the tweaking, Trump’s comments come as an enormous relief. Given that 80 percent of Canadian exports go to the US, any significant protectionist measures from the US could have drastic negative implications for the Canadian economy.
Will Donald Trump break radio silence and provide details about his economic stance? Trump has promised to cut taxes and spend big on infrastructure structures, but he has not released any details in this regard, much to the consternation of the markets. Last week, Trump said that the administration was working on a "phenomenal" tax plan, which would be released in a few weeks, although he gave no details. Trump’s plan is expected to lower taxes for both corporations and individuals, although tax reform promises to be a slow and daunting task. The markets are looking for some details regarding Trump’s plans for the US economy, and if Trump’s plan to reform the US tax code seems feasible, the markets could rally and push the US dollar to higher levels.