Canada mad as hell and not going to take it anymore - where does this leave USD/CAD

In light of the most recent Trump tweet, which contains the phrase "trade wars are good, and easy to win," spare a thought for Canada. Trump's pledge to impose duties on foreign steel and aluminum to protect national security, and Canada's combative response, add to the downside risks to the Canadian dollar at a time when Nafta negotiations are heating up and the currency doesn't need any more bad news. It's already the worst performer this year among 16 major currencies tracked by Bloomberg.

While it's true Canada is the largest foreign supplier of steel to the U.S., it also buys more than half of America's exports, resulting in a $2 billion bilateral deficit, according to Canadian Foreign Minister Chrystia Freeland. And Freeland's statement Thursday suggests Canadian officials are taking the threat of tariffs somewhat personally, as nations are prone to do in these situations. She called it “entirely inappropriate” for the U.S. to consider Canada a threat to national security, and who could argue with that?

Sure, Canada is still holding out hope it'll be exempt from the coming duties. But with recent Nafta negotiations between the two countries taking a decidedly sour tone in recent weeks, the future of the trade pact looks a lot more tenuous than it did 24 hours ago, and that's bad news for CAD bulls.

Source: Bloomberg Pro Terminal

Jr Trader Alexader Kumanov

Read more:

• NZD/JPY – Short with the main movement after a price action signal
• Jeffrey Gundlach: “USD’s next move is going to be down”
• Here’s a cable forecast for $1.40 till end of 2020
• NZD to 0.59 at end of Q1 2020
• Support for risky currencies as trade war hopes grow