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 looks at the ongoing tariff situation and the de-escalation that has occurred with trade agreements reached in the UK along with decreased tariff levels on China.
Overall, the change in tone trims downside risks to economic growth, with 1.5% GDP growth expected in Canada this year followed by 1% next year. A lack of any new information on the tariff front has seen USDCAD trade down to an 8-month low in early June at 1.3635 remaining highly correlated to broad-based USD direction. Given the erratic trade policy in the US, Moody’s cutting their AAA investment rating on the US and expected FOMC rate cuts in the fall, the broader downtrend remains in place for USDCAD.
With calmer markets and reduced trading activity heading into the summer, George sees a trading range of 1.3500/1.3600 at the low end and 1.3900/1.4000 on the topside.