The Canadian dollar continues to lose ground this week. In the North American session, USD/CAD is trading at 1.3167, up 0.56% on the day. On the release front, manufacturing data will be in focus on both sides of the border. Canada will release Manufacturing PMI, and the key release in the U.S is ISM Manufacturing PMI. On Wednesday, Canada releases Trade Balance and the Bank of Canada is expected to maintain the benchmark rate at 1.50%.
The markets may have been closed for Labor Day, but the Canadian dollar still lost ground, as global tensions continue to spook investors. The simmering trade dispute between the U.S and China shows no signs of easing and resident Trump has threatened further tariffs worth some $200 billion, which could be imposed as early as this Thursday. So far, the two economic giants have imposed $50 billion in tariffs on each other. Canada and the U.S have already exchanged tariffs on each other’s products, and Canadian and U.S negotiators are scrambling to reach an agreement after a Friday deadline was missed. The U.S and Mexico reached an agreement in August, leaving Canada out in the cold, much to the annoyance of Canadian policymakers. In order to reach a new trade agreement with the U.S, Canada will likely have to make some concessions, such as reducing hefty tariffs which protect the Canadian dairy industry. The uncertainty over NAFTA is weighing on the Canadian dollar, which has lost 1.0% so far this week.
