USD/CAD drops as the Loonie gets a boost from tariff headlines

  • Loonie pops on headlines that the US’ Mnuchin is trying to secure an exemption for steel tariffs.
  • Market sentiment has shifted as traders await the next stage of ongoing trade talks between the US and key allies.

The USD/CAD is trading into 1.2930 in the early Asia session following headlines that key economic advisors to US President Trump attempted to convince the POTUS to exempt Canada from the steel and aluminum tariffs that recently hit some of the US’ closest allies.

The Loonie softened through most of Tuesday’s action, lifting the USD/CAD into 1.3066 before the Loonie staged a reversal and sent the Greenback back down. Trump attempted to float the idea of the US taking part in bilateral talks with Mexico and Canada separately, a notion that both countries promptly rejected, and the CAD has regained its composure, chalking out Tuesday’s gains for the USD.

This week sees Canadian Unemployment figures on Friday, and the economic calendar is largely free of high-impact events until then for the Loonie. Market focus will remained locked onto the ongoing NAFTA talks, and the worsening trade dispute between the US and Canada.

USD/CAD levels to watch

As noted by FXStreet’s Matias Salord, “The 1.3000 area is again a resistance level to watch followed by 1.3045 (May 29 high) and 1.3065 (Jun 5 high). On the downside, supports might lie at 1.2945, 1.2915 (Jun 5 low) and 1.2895 (Jun 4 low).”

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