The Canadian dollar turns with a stay of customs prices

The Canadian dollar turns with a stay of customs prices
The last minute agreement on customs tariffs concluded today by Canada and the United States has made the Canadian dollar jump, turning a 22-year-old hollow. With a spinning star-shaped candle and a dynamic change, is a short-term summit in place for the USD/CAD pair or here is simply another break before the next step on the rise?
- Canada obtains a 30-day suspended rate thanks to the border agreement with the United States
- The USD/CAD pair is reversed after reaching its lowest level since 2003
- The models of a shooting star and the evening star signal a possible summit
- The support at 1,4400 is at the center of the next directional development
Canada has obtained a 30 -day suspended rate from US President Donald Trump, accepting a border plan of $ 1.3 billion which includes “new helicopters, new technologies and staff, reinforced coordination with our American partners and Increased resources to stop the fentanyl flow, ”according to Canadian Prime Minister Justin Trudeau.
Trump had already signed an executive decree to introduce 25% customs duties on Canadian imports on February 4, excluding certain energy products.
The USD/CAD pair was shaken by the news, reversing an increase of more than 2% which saw the Canadian dollar fall to its lowest level since 2003 earlier in the session. The dusting dust, the markets now have a brief window during which large commercial titles could play a less important role in determining the management of the USD/CAD pair.
Details of the agreement with Canada
Outgoing Canadian Prime Minister Justin Trudeau revealed the details of the agreement during a telephone conversation at the end of the afternoon with Trump, saying that nearly 10,000 first-line people will eventually be deployed to protect the border. Trudeau also undertook to name a “fentanyl tsar”, to designate drug cartels as terrorists and to launch a joint Canada-state strike force to fight against “organized crime, fentanyl and laundering money ”.
Trudeau said he had also signed a new intelligence directive on organized crime and fentanyl, initially supported by 200 million dollars funding.
Other measures to come?
In such a partisan political environment, opinions on the winners and losers in this agreement will not miss.
Some will say that Trump has obtained exactly what he wanted in border policy, strengthening his position for new commercial negotiations when the next tariff deadline will arrive in early March. But Canada was not too bad either, avoiding immediate prices while concluding an agreement, the success of which will be incredibly difficult to measure, especially in just 30 days.
Trump could simply have followed the executive decree and wait to see if there was an adequate response, but he did not do it. It is revealing. He also left a negotiation margin, announcing the prices on Saturday but delaying their implementation on Tuesday.
Leaving aside the political posture, the first measures suggest a clear desire to negotiate. This also reinforces the way markets could react to future trade tensions, by buying risk reductions.
Of course, Trump will try to obtain more concessions from Canada, Mexico, China and the European Union – everyone knows it – but as long as he has not put his threats to Execution, the markets will probably not be concerned with this temporary drama.
Although this creates big risks for more risky assets – as evidenced by the initial reaction on Monday – until we were witnessing a real climbing and an implementation, the story suggests that the maintenance of lower positions supported could be expensive.
High event risk
The immediate threat of customs tariffs being avoided, the attention of the exchange markets could briefly return to traditional factors such as economic data and implications on interest rates. The calendar for the next four days is responsible, with the report on non-agricultural jobs in the United States and the ISM services index on Wednesday.
Assuming that there is no news on trade – which is an important hypothesis – these two events have the potential to move the USD/CAD pair and the exchange market in the broad sense.
The calendar of the federal reserve stakeholders is also responsible, even if the emphasis should be put more on the remarks of Michelle Bowman and Adriana Kugler, who will be published after the employment report.
With so many good news already integrated from American economic prospects and less than two full decreases of the Fed rates expected by the markets in 2025, the risks seem to lean towards more accommodating results or comments.
Last week again, the president of the Fed, Jerome Powell, reiterated that the FOMC did not think that a new weakening of the labor market was necessary to reach its mandate in terms of inflation. Keep this in mind.
Technical analysis
The daily starter in a shooting star on Monday for the USD/CAD pair was one of the most spectacular movements for a pair of major currencies, delivering a 2.8% negotiation range and sending the Canadian dollar to its lowest level for 22 years in the process.
By leaving aside the major securities on the trade and the prices, the price evolution suggests that we may have attended a short-term summit. Not only did Monday produced a shooting star, but a three -candle evening star model was also completed. Momentum indicators become lower, the RSI (14) breaking its upward trend and the MacD being likely to confirm the signal imminently.
For the moment, the overthrow has stopped at the upward trend support established on January 20. The USD/CAD pair was also purchased in hollow below 1,4400 during each of the last five sessions, including the first Asian exchanges on Tuesday.
A convincing break and a fence below 1,4400 would strengthen the arguments in favor of a deeper withdrawal, the 50 -day mobile average and a minor support at 1.4270 becoming specifying. Below, 1.4195 and 1.4090 are additional levels to monitor.
Alternatively, if the USD/CAD pair fails to pass under 1,4400, this opens up a potential upward configuration in which long positions could be established above, with stops placed below for protection. The old heights of 2020 and 2016 could serve as upwards.
By David Scutt, Forex.com »Official site
David SCUTT is a former trader in cash -speaking securities, in the long term and on the money markets with more than 10 years of experience in banking cash. David also worked as editor -in -chief of the markets and the economy for Business Insider, covering macroeconomic events and the main market events in Asia.