The USDCAD has moved higher after trade talks between the U.S. and Canada broke down.
This morning, USTR Greer said the U.S. offered Canada significant concessions in the latest negotiations, but Canada continued to seek more, contributing to the breakdown in talks
Greer downplayed the broader economic impact, saying the latest tariff measures affect only a small portion of overall U.S.-Canada trade. He also said political considerations played a role in Canada’s negotiating stance and reiterated that the U.S. trade deficit with Canada remains an issue for the administration. On the broader U.S. economy, Greer said the fundamentals remain solid and the economy is on a good trajectory.
That is the fundamental storyline. The technical storyline has seen USDCAD rebound sharply, reflecting a weaker Canadian dollar as traders refocus on the implications of deteriorating trade relations with the U.S. Although both economies would likely feel the effects of a prolonged dispute, the market reaction has initially been more negative for the CAD.