As discussed in Asia Pacific: US tariffs: A minor setback for now, 2 March 2018, the steel tariffs reinforce our view of AUD underperformance on the basis of late-cycle domestic dynamics, and an expected moderation in Australia’s terms of trade . Any new announcement of wider tariffs on US imports from China will not bode well for the AUD, given the currency’s high sensitivity to China’s growth outlook.
On the other hand, the loonie has already incorporated trade policy risk premium and a partial unwind, given Canada’s exemption to the steel and aluminum tariffs, could support CAD this week.
This trade recommendation is valid from the Wellington open Monday to the New close Friday.
-Barclays FX Research