USDCAD trades to a new low (higher CAD) despite threat of steel and aluminum tariffs

The USDCAD is trading to a new session low despite the threat of 25% tariffs on all steel and aluminum imports. Last week, Pres. Trump announced that they would impose a tariff of 25% on Mexico and Canada, but then gave a 30 day reprieve if they shored up the border. Each country pledged manpower and money to protect the borders. The tariffs were avoided..

However, over the weekend Pres. Trump said that he would impose 25% tariffs on all steel and aluminum imports. Guess who are the biggest supplier of US steel and aluminum?

According to Reuters, the U.S. is more heavily reliant on imports with roughly half of all aluminum used in the U.S. being imported,

The vast majority of imports for alumnum comes from neighbor Canada. At 3.2 million tons last year, Canadian imports were twice the next nine countries combined.

As for steel, roughly a quarter of all steel used in the United States is imported, the bulk of it from neighbors Mexico and Canada or close allies in Asia and Europe like Japan, South Korea and Germany.

The move lower in the USDCAD is defying those tariffs on the Canadian dollar.

Looking at the hourly chart above, the pair has reached a new low at 1.4313. The high for the day reached 1.4377 in the first hour of trading today (in the Asian Pacific session).

The move lower has now taken the price back below the 100 hour MA at 1.43219. There is an old swing area between 1.42905 and 1.43043. Below that level sits another swing area between 1.4260 and 1.4268 (see red numbered circles on the chart above) .

The price is not running but the dip below the 100 hour MA is a negative shift. If more momentum can push lower, that swing area may be reapproached.

Conversely, if the break fails, it may disappoint the sellers and bring back buying on tariff fears afterall.

This article was written by Greg Michalowski at www.forexlive.com.