China is seeking a compromise further to the Americans’ deployment of their THAAD anti-missile system to South Korea, significantly upsetting Chinese authorities. Pyongyang, whose sole ally is China, stated that the missiles were the first step in a plan of attack. China is therefore proposing that North Korea suspend its nuclear program in exchange for the U.S. ceasing its military exercises in the South. Tensions had already been stepped up when Seoul was imposed economic sanctions by China, its largest trade partner, because of its dealings with Washington. Markets do not seem overly concerned with the situation with the greenback being in the green this morning.
Yesterday, we learned that Canadian trade balance for January was 810 billion, significantly more than the 750 billion expected. This is therefore yet another economic indicator that will have had very little effect on the USD/CAD pair. This morning, we are trading at the highest level since early January.
This morning, we are keeping an eye on Canadian Housing Starts for February and U.S. inventory levels for January.
