USD/CAD dropped to its lowest level since mid-June after a report that Canada and the US are in the final stretch of talks trading Canadian trade concessions for sectoral tariff relief. Canada faces 50% tariffs on August 19, the deadline both sides are working against, while a fresh jobs report pointed to a resilient domestic economy.
USD/CAD fell 70 pips to 1.3941 on the day. That is its lowest level since mid-June.
The move follows a Globe and Mail report that Canada and the US are in intense discussions that appear to be in the final stretch. Under the outline described, Canada would address a long list of US trade irritants in exchange for sectoral tariff relief.
Canada would also remove retaliatory tariffs on the US and return US alcohol to shelves. According to the Globe and Mail, it would agree "to Washington's interpretation of how dairy quotas should be allocated", one of the concessions under discussion.
In return, the US would lower tariffs on steel and aluminum, without fully removing them. The deal would reportedly be an interim one. Discussions also include aligning external tariffs on certain Chinese goods.
Canada faces 50% tariffs starting August 19, the deadline both sides are working against. Trade certainty before then could offer a possible tailwind for the loonie in the second half of the year. A jobs report released the same day also highlighted the resilience of Canada's domestic economy.
Source: InvestingLive
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