We are pleased to bring you the latest edition of the series produced by our colleagues in RBC Capital Markets, hosted by George Davis, CMT, the award winning Chief Technical Analyst for Fixed Income and Currency Strategy. In this installment, George provides an update on the tariff front and then looks at the Canadian dollar from a technical perspective.
View the George Davis Report
On the tariff front, as of August 1, tariffs on Canadian exports were raised from 25% to 35%. However, this applied only to non-USMCA compliant goods and as of June, 92% of exports fell under the USMCA umbrella, meaning most goods were protected. Further, tariff levels on Canadian goods remain the lowest compared to all other US trading partners.
With regards to the Canadian Dollar, USDCAD recently pierced a four year support trendline at 1.3750 in June. The resulting bearish trend reversal features initial support at 1.3540 with longer term support at 1.3350. Important resistance levels to watch are located at 1.3825 followed by the high reached in May of this year at 1.4016.
Going forward, moves toward 1.3850 – 1.4000 should provide an opportunity for USD sellers, while buyers should look at 1.3540 as an area to add exposure.