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 examines the potential risks of US tariffs and their expected impact on the Canadian dollar. Given that 77% or our exports go to the US and 12% of the Canadian workforce are employed by US companies, tariffs pose a significant risk to the Canadian economy. Since the election, when the notion of tariffs were first introduced USDCAD has priced in only a very small amount of tariff risk.
George’s forecast of 1.4500 for USDCAD in Q2 assumes modest and targeted US tariffs. However, the currency remains vulnerable to any tariff measures, especially if they are higher and more widespread than expected. The absence of clarity on the tariff front will likely limit CAD strength going forward. George sees a higher trading range heading into February with 1.4000 on the downside and 1.4500 on the topside.