Article / 05 March 2018 at 22:57 GMT

US Wrap: Loonie crushed by tariff threat for Canada

FX Trade Strategist /

  • ISM Non-manufacturing and Markit PMI data better than expected. 
  • Trump tweets on tariffs, suggesting Canada will not be exempt 
  • German coalition deals and Italian election results lift EUR 

By Michael O’Neill

NY Focus: A tweet by President Trump at 5:47 am ET, put a NAFTA collapse on the agenda. USDCAD soared, rising from 1.2895 to 1.2999. The President tweeted:

Round seven of the NAFTA talks ended today, and the US representative did not sound optimistic, suggesting bilateral deals could be an option.

EURUSD rallied throughout the session. German political parties finally agreed to a coalition government led by Angela Merkel. The Italian election results were mostly as predicted. (No party won a majority) EURUSD rose from 1.2284 to 1.2347.

Sterling had a good day. Better than expected UK Services PMI data and a report that UK PM May said she was close to a transition deal, lifted GBPUSD to 1.3876 from 1.3804. Brexit concerns led to a retreat to 1.3825.

USDJPY climbed steadily, rising from 105.65 at the open to 106.22 by the close, supported by a rebound in stock prices and a rise in equity yields.

 Is there really steel in Trump's trade proposals? Traders think not. Photo: Shutterstock

Wall Street soared, in part because traders believe Trump’s trade plan is all bluster and a negotiating ploy. House Speaker Paul Ryan expressed concern about the consequences of a trade war - “urging the White House to not advanced this plan”.  

The DJIA rose 1.37%, S&P 500 gained 1.10%, and the NASDAQ climbed 1.0%

WTI oil prices reversed an early morning dip and climbed to $62.76 from $61.13/barrel. Traders ignored an International Energy Agency report that the US would take market share from Opec and instead, focused on the falling greenback.

Tuesday Focus:  The wait for Thursday’s European Central Bank meeting should keep EURUSD inside its recent 1.2260-1.2360 range 

The four-hour USDX chart suggests that although the US dollar may be in a bit of an uptrend, it is still inside the trading band that has contained price action since the middle of January.

USDX 4 hour chart
Source: Saxo Bank 

-- Edited by Adam Courtenay

Michael O'Neill is an FX consultant, currency strategist and author of the Trade of the Day at Follow Mike or post your comment below to engage with Saxo Bank's social trading platform.

John Shaw John  Shaw
Wow. If this is the way that the USA treats a long time buddy like Canada.....
Ol' Bone Spurs here best not forget who his friends are in an unfriendly world.
Michael O'Neill Michael O'Neill
He is 72. He won't be around to reap what he sows


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail