- The USD/CAD outlook suggests economic uncertainty in Canada.
- Trump announced a 35% tariff on imports from Canada, which weighed on the loonie.
- Market participants are awaiting Canada’s monthly employment report.
The USD/CAD outlook suggests economic uncertainty in Canada following Trump’s announcement of a 35% tariff on goods from the country. As a result, the Canadian dollar collapsed against the US dollar. Meanwhile, market participants are awaiting crucial employment data from Canada.
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Trump on Thursday intensified his tariff threats by announcing more tariffs on countries that had not yet signed trade deals. Notably, Canada got a 35% tariff on its imports, which weighed on the loonie. If there is no trade deal between Canada and the US by August 1, the tariffs will take effect. Such an outcome would dim the outlook for Canada’s economy. At the same time, it could result in a trade war between the two countries.
Meanwhile, the US president also said he was planning a blanket tariff of 15% or 20% on most countries. The news boosted the dollar, which could benefit from higher import costs and inflation. However, in the long run, trade wars might hurt the US economy. Already, Brazil has vowed to retaliate come August 1.
Meanwhile, market participants are awaiting Canada’s monthly employment report. This will help shape the outlook for Bank of Canada rate cuts.
USD/CAD key events today
- Canada employment change
- Canada unemployment rate
USD/CAD technical outlook: Bulls face strong resistance at 1.3700
On the technical side, the USD/CAD price has bounced higher after meeting the 30-SMA support. Although it reached a new high, bulls were unable to close above the key 1.3700 level. Instead, the price made a large wick, showing a rejection.
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The new bullish move has met solid resistance at the 1.3700 level, causing the price to stall for some time. However, the bullish bias remains strong, since the price respected the SMA as support. Therefore, bulls may attempt another push against the resistance. A clean break above the level would allow USD/CAD to target the 1.3800 resistance. Moreover, it would strengthen the bullish bias.
On the other hand, if the 1.3700 resistance holds firm, the price could drop back below the SMA. In such a case, bears would likely retest the 1.3550 support level.
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