Both China and India have indicated that they are more than willing to match any new tariffs that Trump may further impose on them.
U.S. Commerce Secretary Wilbur Ross on Thursday defended Trump’s decision to unleash tariffs on its trading partners, saying they’re necessary to ensure reciprocity.
“We’re trying to defend ourselves against their bad practice; they’re screaming and yelling — they’ve been spoiled for many, many years and that game is over,” Ross said in an interview on Bloomberg Television. “We’re going to fix the problem of protectionism around the world and we’re going to fix it by making it more painful for those countries to do bad practices than to do the right thing, which is to lower the trade barriers and lower their tariffs.”
Expect the Canadian dollar to stay around these levels for a while.
USDCAD 1.3308, 1.3280, 1.3250 1.3335, 1.3365, 1.3386
EUR-USD has remained heavy but within its range from yesterday, remaining near the 1.1550 level and above the three-week low seen on Tuesday at 1.1531. Yield differentials remain a draw of the greenback, with Fed Chairman Powell yesterday maintaining expectations for further rate hike. This follows the run of dovish-tilting remarks from ECB policymakers this week, with the central bank’s president, Draghi, remarking that “we will be patient will the timing of the first and will take a gradual approach… thereafter.” We had been advocating fading EUR-USD gains in the wake of the ECB’s dovish-tilting guidance of last week, which put emphasis on the Fed’s tightening path. After a two-week hiatus, the sharp declines since last Thursday have reaffirmed a down trend that’s been in evolution since mid April. The weekly close on Friday below the previous weekly close at 1.1659 is consistent with Dow Theory’s definition of a bear trend. EUR-USD has resistance is at 1.1597-1.1600.