Canadian Dollar (CAD) Exchange Rates Rally on Tariff Exemption Hopes
The Pound Canadian Dollar (GBP/CAD) exchange rate traded lower on Wednesday, falling as investors responded to news that US Treasury Secretary Steven Mnuchin has urged US President Donald Trump to grant Canada exemption from the proposed tariffs on steel and aluminium.
Mr Mnuchin reportedly pressed the President at a meeting with senior economic policymakers, pointing out that the US already has a $ 2bn steel surplus with Canada.
‘The Canadians made an impassioned personal plea to Mnuchin to take the case up with Trump,’ an administration official stated.
Not all advisors were in agreement, however, with many economists arguing that the US has a duty to national security to address their sizable $ 17.5bn goods deficit with Canada – therefore making the tariffs warranted.
Nonetheless, reports that the US President is ‘still deciding what to do about Canada’ provided some hope to ‘Loonie’ bulls, with the possibility that he could be more lenient driving the Canadian Dollar higher.
Pound Canadian Dollar (GBP/CAD) Exchange Rate Slides as European Governments Warn against Buying British Goods
Today was a rather quiet data day for the UK, but the Pound Canadian Dollar (GBP/CAD) exchange rate still found room to fall on news that the Dutch government has advised businesses to avoid buying British machinery in the run-up to Brexit.
The Dutch government told exporters that under ‘rules of origin’ trade laws there could be a danger of them losing business if the majority of their products contained British parts.
In order to comply, businesses were told that a product must contain at least 55% parts made within the EU.
Investors were concerned by this news, with any sign of other governments copying the Dutch having the potential to severely harm the British economy.
Pound Canadian Dollar (GBP/CAD) Exchange Rate Forecast: Canadian Unemployment in the Spotlight
The next big data event for the GBP/CAD exchange rate will likely be Friday’s Canadian labour market statistics, with the hourly earnings figures and overall unemployment rate result liable to knock GBP/CAD up or down.
Investors currently expect the unemployment rate to hold at 5.8%, though an expected 22.0k added jobs could give the ‘Loonie’ a small shot in the arm.
Beyond this, investors will be keeping a close watch on trade developments between the US and Canada, with any sign of an olive branch or outright agreement liable to put GBP/CAD under greater pressure.
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