HomeContributorsFundamental AnalysisCanadian Dollar Ticks Higher, Key Job Reports Loom

Canadian Dollar Ticks Higher, Key Job Reports Loom

USD/CAD is showing slight losses in the Friday session. In the North American session, USD/CAD is trading at 1.2878, down 0.15% on the day. On Friday, employment data will be in focus on both sides of the border. Canada releases employment change, and the US publishes wage growth and nonfarm payrolls.

Is President Trump baiting his trading partners into an all-out global trade war? After declaring that trade wars are a “good thing”, Trump made good on his tariff threat on Thursday, and signed an order imposing 25% tariffs on steel imports. Canada is the largest exporter of steel to the US, accounting for some 16% of US steel imports. The move could have severely impacted on the Canadian steel industry, but Trump has exempted Canada and Mexico from the tariffs, at least temporarily, drawing a huge sigh of relief from Ottawa. Still fears of an all-out global trade war remain a serious concern for Canada and the resignation of Gary Cohn, a senior economist in the White House who opposed the tariffs, will only dampen investor risk appetite.

The Federal Reserve is widely expected to raise rate four times in 2018, but the Bank of Canada will likely be unable to compete with that kind of pace. The BoC is concerned with economic growth, which slowed in the fourth quarter, as well as uncertainty over NAFTA, which could fall apart if the Trump administration makes good on its threat to withdraw if its demands for more favorable treatment for US goods is not met. The Bank is not expected to raise rates before May, and if the Fed outpaces the BoC on the rate front, the Canadian dollar could lose ground to a more attractive US currency.

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