What is the "Trade Shift," and Why Is It Affecting the Canadian Dollar So Much?

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3910-1.4100

Euro                 1.4710-1.4920

Sterling            1.7610-1.7810

WTI Oil (opening level) $68.71

The concept behind "Make America Great Again" reflects a focus on reducing trade deficits and reshaping international trade dynamics. This trade approach involves implementing tariffs and renegotiating agreements to prioritize domestic industries.

During the previous administration, significant tariffs were imposed on trading partners, aiming to reduce the U.S. trade deficit. For example, tariffs on solar panels and washing machines ranged from 30% to 50%, while steel and aluminum imports faced 25% and 10% duties, respectively. These measures impacted a broad range of countries, including Canada.

As markets anticipate policy shifts under new leadership, there is heightened scrutiny on countries with significant trade relationships. Canada, which has maintained an $8 billion trade surplus with the U.S., could see increased attention to its trade numbers. This scrutiny may contribute to pressure on the Canadian dollar, with a potential bias toward weakening in response to evolving trade policies.

Meanwhile, gold prices have risen, bolstered by a Goldman Sachs report projecting a climb to $3,000 per ounce within the next year. This increase reflects growing market interest in safe-haven assets amid global economic uncertainty.