- Trump slaps 35% tariff on Canada effective August 1
- Tariff fatigue takes sting out of latest Trump tariff action against EU and Mexico.
- US dollar modestly higher on risk aversion.
USDCAD open 1.3680 overnight range 1.3673-1.3706, close 1.3691, WTI 69.41, Gold 3371.18
The Canadian dollar shrugged off Trump’s latest tariff salvo, chalking it up as an “attention-getting, noisy trade leverage attempt.” The adults at the negotiating table took it in stride and tariff talks continue.
Friday, Canada’s June employment report on surprised to the upside with a gain of 83,100 new jobs and a drop in the unemployment rate to 6.9% from 7.0%. The news looks great but the bulk of the jobs were part-time and the labour market is far cooler today than it was a year ago. It doesn’t change the narrative for those expecting another BoC rate cut at the end of the month.
WTI climbed from 66.43 on Friday to 69.65 and is trading near session highs in New York, brushing off OPEC’s announcement of higher production. The move reflects a tighter-than-expected global supply picture that’s lending support to prices in the short term. Fresh data showing a sharp rise in Saudi and Iranian crude exports to China, alongside upbeat Chinese trade figures, point to stronger demand and are helping keep oil bids intact.
Trump fired off tariff letters to the EU and Mexico, announcing a 30% levy effective August 1. The timing disrupted ongoing trade talks but barely moved FX markets. Traders have grown numb to Trump’s outbursts, with “tariff fatigue” setting in across desks. Unlike the market mayhem seen on Liberation Day, the latest headlines barely dented sentiment, and US equity markets recently touched record highs.
Asian equity indexes were dented by tariff nerves, though losses were modest. Hong Kong’s Hang Seng managed a 0.26% gain, while the ASX dipped 0.11% and Japan’s Topix finished flat. European bourses were rattled by Trump’s EU tariff salvo, with Germany’s DAX off 0.80% and France’s CAC 40 down 0.42%. The UK FTSE climbed 0.40%, helped by Trump’s pro-Britain lean. S&P 500 futures are down 0.32% and gold surged to 3371.20.
EURUSD traded in a 1.1654–1.1698 band, recovering from its early selloff triggered by the EU tariff letter. Traders quickly dismissed the headlines, while the EU continues to pursue non-US trade partners to sidestep the fallout of Trump’s tariff crusade.
GBPUSD drifted lower in a 1.3451–1.3505 range but clawed back some ground in early New York. Sterling remains on the defensive after BoE Governor Bailey reiterated that rate cuts are coming. His dovish tone, coupled with weak UK GDP, boosted bets for an August 25 bp cut to 4.00%.
USDJPY churned inside a 146.86–147.57 corridor, buoyed by a jump in the 10-year Treasury yield from 4.318% to 4.431%. The upside was tempered by stronger-than-expected Japanese machinery orders, which rose 4.4% m/m, though still well below April’s 6.6% y/y result.
AUDUSD traded in a 0.6555–0.6588 range, finding modest support from upbeat Chinese trade figures. However, gains were capped by renewed risk aversion tied to Trump’s tariff salvos and broad US dollar strength.
The US economic calendar is empty and Canada wholesale sales data is due.
