The trade escalation between the US and Canada ratcheted up over the weekend. Trump made a series of inflamatory posts, including this hockey-related one with Trump saying “Get up Governor”. That culminated in Trump announcing a ban on Bombardier planes. The maker of Challenger and Global business jets was in Trump’s crosshairs last year as well after the slow certification of US jets in Canada.
It was a bizarre move given that Bombardier has more than 2,800 US suppliers. According to Bloomberg, tts Global 7500 jet
has wings made in Texas, avionics made in Iowa and motors made in
Indiana.
In any case, Canada’s counter tariffs on US goods went into effect today, with rates of 15-50% targeting hundreds of products.
Another strange move from Trump was a seeming jab at the loonie.
“Canada’s (currency) Dollar imbalance with the U.S. is unacceptable. It has been that way for years — but no longer!”
It seems as though because Canada uses a currency called the ‘dollar’ that Trump thinks they should trade at 1:1.
Despite all this, the Canadian currency is shrugging it off today, in an increasing sign that markets are tuning out Trump. USD/CAD is down 7 pips today to 1.3807 and has generally traded lower since tensions escalated last last month.
On both the day and the longer-term chart, the downtrend might overstate the stability of the loonie. That’s because at the same time as Trump has been fighting with Canada, he has escalated the war in Iran. That’s pushed oil prices to the highest since June. Technically, the WTI chart is showing a dangerous potential breakout.
Oil is up $2.45 to $93.93 today after the US fired on three tankers sailing to Iran and Iran fired on US bases. Yemenese Houthis also attacked Saudi Arabian energy infrastructure.
For today, the North American economic calendar is bare and the Fed is in its blackout period so eyes will be on Trump and further potential escalation against Canada. A good barometer of how seriously the market is taking the threats will be shares of Bombardier, which have had a sensational run since the pandemic, returning nearly 50x.
