Canadian Dollar Has Asymmetric Risk with Trump’s Reflationary Views

Fundamental Forecast for CAD: Bearish

  • Trump Trade Plan And Its Effects on CAD In Focus Ahead of Inauguration
  • Canadian Dollar hits lowest levels given March
  • If you’re looking for trade ideas, check out a Trading Guides.

The Canadian Dollar traded as low as 1.3547 on Friday, attack a lowest levels given March. This week brought a extraordinary eventuality of a non-politician Real Estate Magnate, Donald Trump being elected President of a United States. President-Elect Trump ran on a height of renegotiating trade agreements that did not advantage a United States as he saw fit. The ripping adult of a contracts is particularly concerning for Canada who has $295M of exports in 2015 to a United States underneath a stream trade agreement of NAFTA (North American Free Trade Agreement.)

The second largest receiver of Canadian exports is China with $18.5M. Therefore, any renegotiation that boundary a volume of trade Canada does with a US, that is still conjecture during this point, would be a vast strike to a Canadian economy which has focused on Exports.

From a Trade Perspective, Nothing Comes Close To Canadian Exports to U.S.

Canadian Dollar Has Asymmetric Risk with Trump’s Reflationary Views

Data Source: Bloomberg

Some institutions have called a Donald Trump imminent administration a new epoch since of his Fiscal Stimulus bulletin aligned with a Republican Congress that will concede him to pass distant some-more than he could have in a deadlocked in Congress. The significance of a new-era is what that could do for acceleration in a United States, that has been seenat a long end of a UST Yield Curve. On Wednesday, a UST 10Yr produce had a largest intraday range, that was demonstrative of acceleration concerns.

When mixing a Trump choosing with Brexit, there appears to be a approved trend towards nationalism that could continue to feed a USD Bulls and US Treasury Bears. Continue to keep an eye on a cost of Crude Oil because of a inability for Crude Oil to pull aloft as some-more trade pressures are placed on OPEC to come to an agreement to cut production.

Where are financial markets streamer into a fourth quarter? See a forecast and find out!

Economic Data on Deck for Canada This Week

The categorical mercantile information indicate for a week forward is Friday’s CPI, that is approaching to arise above a before reading of 1.3% to 1.5% YoY. Outside of Tier-1 information points, Wednesday’s Manufacturing Sales MoM for Sep is approaching to decrease from a before reading of 0.9% to 0.1%.

Technical Macro Outlook: Friday’s run aloft in USD/CAD took us toward a new focal indicate of insurgency of a 50% Fibonacci retracement turn from Jan highs to May lows during 1.3575. The subsequent pivotal Fibonacci section in concentration is a 61.8% retracement during 1.3838.

Read Our Recent USD/CAD Technical Note Here

Canada will continue to demeanour for ways to retreat a Trade Balance trend, and one certain note was a China would start trade CNY approach with Canada on Nov 14. Canadian PM Trudeau along with others was discerning to strech out to Trump and honour him as good as promulgate his honesty to NAFTA renegotiations, that seem inevitable.

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