Dominic LeBlanc, who is the Canadian minister responsible for US-Canada trade, says that private government to government conversations on USMCA are “not discouraging”. Regarding separate bi-lateral deals, he said there have always been bilateral arrangements between the three countries.
Sticking with the double negatives, he said he’s “not pessimistic” about eventual bilateral sectoral arrangements with the US.
One of my big themes is trading this year was about how many things could go ‘right’ for Canada and if you ignore the leaders like Carney and Trump, the messages from the deputies like LeBlanc and Jamieson Greer have been positive. Once that cloud clears — hopefully in H2 — there should be a wave of investment in Canada around some concrete parameters and the improvements in natural resources prices.
USD/CAD is up 21 pips today but the loonie is outperforming AUD and NZD in a day that’s seeing broad risk aversion. A good portion of that is due to the rally in oil prices but Canadian current account data today showed huge inflows into Canadian government bonds in Q4; the trade deficit numbers also highlighted a decent backdrop.
Zooming out, the USD/CAD chart isn’t too exciting at the moment. It briefly hit a one-month high earlier this week but is back into the range. We will watch the top of that in the days ahead with Iran and tomorrow’s Q4 Canadian GDP as possible swing factors.
USD/CAD daily
Ultimately, this 200 pip range won’t persist but indications on the broad economy in Canada and the US are mixed. Canadian housing continues to weaken but consumer spending has been strong and Canadian retailers remain upbeat. In the US, the big investments in AI don’t appear to be leading to employment while deportations are disrupting part of the employment market. Rate cuts should help the US but tariff uncertainty isn’t promoting investment.
