USD/CAD: US auto tariffs & Canadian election result in focus – MUFG
The US Dollar has strengthened modestly overnight against other G10 currencies as it continues to consolidate at lower levels following the heavy sell-off during this month. The USD has been supported in part by further reports overnight that the Trump administration is considering easing tariff plans, MUFG's FX analyst Lee Hardman reports.
USD firms modestly on tariff easing hopes
"Bloomberg has reported that President Trump is on track to ease the impact of his auto tariffs, with changes sought by the industry that would lift some levies on foreign parts for cars and trucks made inside the US. US Commerce Secretary Howard Lutnick described the deal as 'a major victory for the president’s trade policy by rewarding companies who manufacture domestically while providing runway to manufacturers who have expressed their commitment to invest in America and expand their domestic manufacturing'."
"In other news overnight, it has been reported that the Liberal Party led by Mark Carney has won re-election in Canada. It concludes a sharp turn around in fortunes for the Liberal Party who were well behind in the polls when former Prime Minister Justin Trudeau resigned. The Canadian Dollar initially strengthened after it was announced that the Liberal Party had won resulting in USD/CAD falling to a low overnight of 1.3809 but the pair has since risen back to up towards 1.3870 as it became clear that they may not win a majority."
"Prime Minister Carney stated that if he won re-election, he will seek talks with President Trump that are comprehensive, ambitious, and respect Canada’s sovereignty with the USMCA trade deal scheduled to be reviewed in July of next year. The Canadian dollar has already staged a strong rebound over the past month after Canada alongside Mexico were hit less than feared by President Trump’s Liberation day tariff plans and the US dollar weakened more broadly resulting in USD/CAD dropping back towards the 1.3800-level from closer to the 1.4400-level. "