EBC Markets Briefing | Loonie up as Trump paused 50% tariffs on Canada

The Canadian dollar rose on Wednesday after Trump said Washington was not in any talks with Iran and has no plans to start new ones. He added that the Strait of Hormuz is open and cleared of water mines.

Trump delayed a planned 50% tax on select Canadian goods for three days. He made the announcement late Tuesday hours before the deadline, stating that the two countries reached a tentative agreement.

While the new tariffs are a fraction of the $382 billion that the US imported from Canada last year, the high rate on targeted products could still pose major challenges to Canadian sellers.

The US Trade Representative has shifted the timeline toward setting up temporary "interim" trade deals by the end of this year. Major permanent rewrites of the official USMCA pact are being pushed into 2027.

The centre-left Canadian Liberal government announced sweeping immigration reform measures in October 2024 to “pause” population growth, which proves effective against hyper-inflated real estate markets.

The PBO reported that individual real GDP per capita is projected to be 1.4% higher by 2027. But major banks warned of upcoming structural threats of demographic cliff in the long term.

EBC Financial Group analyst say that the loonie peaked out near 1.3850 per dollar, facing its next major barrier at the 200 SMA. The price could consolidate around the current level and retreat towards 1.4 per dollar again.

Asset Recap

As of market close on 18 August, among EBC major products, Targa Resources shares led gains following strong midstream expansion news boosting investor optimism.

Memory and storage stocks are selling off as rising Treasury yields pressure what has been the most extended trade in the semiconductor sector. Micron Technology was the hardest hit.

Asian stocks dropped as a semiconductor selloff deepened, with investors retreating from one of the year’s hottest trades. South Korea's military said it would cut an annual joint military exercise with the US by about half.

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EBC Financial Group Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC Global Financial Collaboration or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.