U.S. President Trump is desperate. At least it looks that way. The election is less than three months away, and Trump is trailing Democrat candidate Joe Biden by as much as 12% in the latest Ipsos poll. China and trade were the two themes that got him elected in 2016, and he is reusing that playbook today.
Last night, Trump signed executive orders barring U.S. citizens from transactions with the owners of Tik Tok and WeChat apps. The Americans believe that these two Chinese apps provide Beijing with access to personal data, which they could exploit for nefarious purposes. Trump claims Tik Tok poses an economic and national security threat. China is not impressed, and the escalation in tensions between the two nations sparked a bit of “risk-off” trading.
Trump attacked Canada again. He announced 10% tariffs on imports of aluminum from Canada. He said “Earlier today I signed a proclamation that defends American industry by reimposing aluminum tariffs on Canada. Canada was taking advantage of us, as usual. The aluminum business was being decimated by Canada, very unfair to our jobs and our great aluminum workers.”
Canadian Deputy Prime Minister Chrystia Freeland said the tariffs were unwarranted and unacceptable.
Prime Minister Justin Trudeau said that Canada would impose retaliatory tariffs on a “dollar-for-dollar” basis.
USD/CAD largely ignored the news the tariff news but rallied just the same, thanks to broad U.S. dollar demand against the majors. China trade tensions supported prices, but profit-taking ahead of today’s U.S. employment report was the primary reason for the rally.
US non-farm payrolls were forecast to rise to 1.6 million, but the estimates are all over the place, thanks to conflicting employment reports. The ADP report was feeble, while Jobless claims have been rather robust.
The US data will overshadow today’s Canadian employment news. Canada was expected to have added 400,000 jobs in July. It is well below June’s 952,000 increase, but the trend is positive. Nevertheless, the employment report will be ignored as it will not have any impact on near-term Bank of Canada policies.
The overnight surge in the U.S. dollar prevented gold (XAU/AUD) and oil prices from adding to this week’s gains.
Gold prices continue to be supported by geopolitical tensions and low interest rates in the major economies.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians