Morning Commentary & Currency Insights – March 5, 2018

Italian elections were the main focus over the weekend where no clear winner emerged resulting in choppy trade and the U.S. dollar still under pressure against most currencies.  Trade war rhetoric is beginning to ramp up with Chinese political advisors urging a response to proposed U.S. tariffs while U.S. politicians are piping up calling the anticipated U.S. actions “deeply concerning” & “unfathomable” as regional politics take precedence over party lines.  This week we have RBA, EU & BoJ rate announcements with no moves anticipated from any of the 3 central banks while manufacturing data will be released in the U.S. and UK.

Friday’s Canadian GDP was in line with expectations and focus is now on Tuesday’s Bank of Canada rate announcement.  With the likelihood being no rate hike the market is focusing on the negative impact of looming trade wars combined with blasé economic data which is pushing us towards the psychological 1.3000 level.  While many in the U.S. are calling for Canada to be exempt from any future tariffs, until clarification comes the Canadian dollar will remain under pressure.