CAD Hits Yearly Lows due to Trump’s Trade Policy
By: Eddy Peng May 3, 2017
Chart 1: USDCAD Daily (1)
Canada’s expected export growth in 2017 is likely to be driven largely by the value of energy exports, which has increased by 18 percent, partly because of a return to normal volumes after wildfires near Alberta’s oil sands last year, the report said. There is increased concern over its growth forecast this year from Canada’s export bank, due to the expectation that Donald Trump wants to upend globalization of trade. In the meanwhile, Export Development Canada, according to its spring 2017 report Tuesday, predicted that the total value of Canadian goods and service exports will jump 6 percent this year and 5 percent in 2018, mainly supported by energy and aerospace. Shipments of metals and ores are also expected to rise significantly. The report titled “Globalization at the Brink?” is a nod to the headwinds Canada faces from Trump, amid looming renegotiation of the North American Free Trade Agreement and longstanding disputes over lumber and dairy rules. However, no one is horrified about the substance of Trump’s complaints, and Canadians have no great reason to worry about that, due to the strength from the U.S., Europe and in developing markets creates an opening for exporters willing to shrug off the Trump factor. In macroeconomic data of Canada, although the GDP of February was set at 2.5 percent, slightly lower than the forecast, the high readings of Industrial Product Price and Manufacturing PMI show a fairly good prospects of its economy. A yearly high price of USD against CAD reveals potential risk due to promising economy of Canada coupled with raised angsts over Trump’s tax reform. In considering the long term technicals, it is currently moving upward through channel since April last year. According to the daily chart, it’s approach the upper channel line which could be considered as a key resistance. If it breaks to this resistance, traders are expected to look for further rise afterwards.
Chart 2: USDCAD Daily (2)
