Trump Imposes Countervailing Duties On Canadian Lumber Products
Commodity currencies are generally lower following the Japanese Yen. Canadian Dollar is pressured by news that US President Donald Trump's administration imposed countervailing duties on Canadian Lumber products, ranging from 3% to 24.1%. Trump said yesterday that there will be 20% tax of softwood lumber coming from Canada. The move is seen as an escalation of trade battle between the US and its neighboring countries. US Commerce Secretary Wilbur Ross said that "it became apparent that Canada intends to effectively cut off the last dairy products being exported from the United States." And, because of unfair Canadian subsidies to the lumber industry, there is a need to impose "countervailing duties of roughly one billion dollars."
USD/CAD Daily Outlook
USD/CAD's rise continues. The break of 1.3598 key resistance indicates a resumption of medium term rise from 1.2460. Intraday bias remains on the upside and USD/CAD should target next medium term Fibonacci level at 1.3838. On the downside, below 1.3524 minor support will turn bias neutral and bring retreat. But downside should be contained well above 1.3222 support and bring another rise.
In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. The second leg from 1.2460 is likely still in progress and could target 61.8% retracement of 1.4689 to 1.2460 at 1.3838. We'd look for reversal signal there to start the third leg. However, break of 1.2968 will argue that the third leg has already started and should at least bring a retest of 1.2460 low. Meanwhile, sustained trading above 1.3838 would pave the way to retest 1.4689 high.
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