Trump calls out timber to the northern neighbor. Trudeau says Canada will respond firmly and reasonably. The issues of milk and lumber cause tension. The loonie is higher. What’s next? Here are two opinions:
Here is their view, courtesy of eFXnews:
USD/CAD: Breakout: A Strong Chance Of Hitting 1.40 – SocGen
Societe Generale FX Strategy Research notes that USD/CAD is breaking out higher after President Trump announced tariffs on US softwood lumber imports from Canada, and threatened them for dairy products too.
In that regard, SocGen argues that while the Canadian dollar is cheap around current levels, the economy’s hardly charging forward.
“This latest move has a strong chance of seeing a break higher towards USD/CAD 1.40 before the CAD does, finally, become a really attractive long-term buy,” SocGen argues.
USD/CAD is trading circa 1.3612 as of writing.
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CAD: Lumber Tariffs The ‘Tip Of The Iceberg’? – CIBC
CIBC World Markets Research notes that CAD has extended its recent weakening trend overnight, with a ‘not-too-surprising’ move by the US to impose duties on Canadian softwood lumber being part of the backdrop.
In that regard, CIBC argues that given that Lumber products represent about 3% of total goods exports, its broader macro impact is in the decimal places of GDP.
As such, CIBC believes that it’s likely that the reaction today is on fear that the lumber duties are the’tip of the iceberg’, and more telling will be how the broader NAFTA talks go.
USD/CAD is trading circa as of writing
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