Foreign Affairs Minister Chrystia Freeland delivered a warning to her U.S. counterpart Rex Tillerson regarding a Canadian reply to the imposition of tariffs on Canadian exports to the United States. The trade balance between the two countries is relatively even, with a total of $540 billion in goods changing hands in 2015 and Canada a net exporter of 50 billion (a little less than 3% of Canadian GDP). From a U.S. standpoint, this places us as their fifth largest trade deficit, but far behind the $340 billion shortfall with China. Nevertheless, renegotiating NAFTA or any changes to trade conditions could have a material impact on the Canadian economy and by extension the USD/CAD pair.
There is some news of interest on the calendar this morning. At 8:30 the December New Housing Price Index for Canada will be announced at the same time as Initial Jobless Claims data are posted in the United States. Then at 10 a.m., U.S. Wholesale Inventories for December will follow.
