- The USD/CAD pair is ascending, fueled by renewed optimism surrounding trade relations after promising developments in US-China trade discussions.
- A collaborative announcement indicated that the United States will temporarily suspend tariffs on Chinese goods by 24 percentage points for an initial duration of 90 days.
- The Canadian Dollar (CAD) is experiencing weakness, influenced by Canada’s unemployment rate which unexpectedly increased in April.
The USD/CAD exchange rate is extending its bullish trend for the fourth straight trading session, trading in the vicinity of 1.3980 during Monday’s European trading hours. Concurrently, the US Dollar Index (DXY), a measure of the US Dollar’s (USD) value relative to a basket of six major currencies, is also gaining ground, trading near 101.60 as of this writing. This movement reflects a broader strengthening of the US Dollar in the global market. Investors are closely monitoring upcoming economic data releases from both the US and Canada, including inflation figures and employment reports, which could further influence the USD/CAD exchange rate.
The US Dollar (USD) has found support following a joint communiqué issued after high-level trade negotiations that took place over the weekend in Geneva, Switzerland. The announcement conveyed that the United States intends to temporarily suspend tariffs on Chinese goods by 24 percentage points for an initial period of 90 days, a move perceived as a significant step towards de-escalating trade tensions between the two economic powerhouses. Market analysts suggest that this development could lead to increased risk appetite and potentially impact global trade flows in the coming months.
US Treasury Secretary Scott Bessent underscored the importance of the agreement, highlighting a 90-day standstill on tariff increases and a substantial 115% reciprocal reduction in existing tariffs. This reciprocal reduction is expected to ease the burden on businesses and consumers in both countries. US Trade Representative Jamieson Greer acknowledged that the previous embargo strategy had become unsustainable, reaffirming both nations’ commitment to the temporary suspension. However, Greer also pointed out that the issue of fentanyl remains a point of contention that requires further negotiation and resolution. The market is now awaiting further details on the implementation of the tariff suspension and any potential impact on corporate earnings and economic growth in both the US and China. Furthermore, the long-term implications of this agreement on the global supply chain are being closely scrutinized by economists and investors alike.
