A hint that Trump may target Japan next sent USD/JPY lower Thursday while the Canadian Dollar jumped on chatter from the Bank of Canada. That's quite fitting considering the US and Canada jobs reports are due next. The yen was the top performer while the New Zealand dollar lagged.
Japan has been curiously sidelined in the global trade war despite being an obvious candidate for Trump's ire. The country has a large trade surplus and a structural imbalance with the US. It's also routinely angling for a weaker currency.
Much of the credit initially went to Abe who went on a major charm offensive with Trump immediately after the election but that may be wearing off. In comments to a WSJ opinion columnist Thursday Trump he was described as frustrated with Japan's surplus and said his relationship with Abe could soon deteriorate.
The news comes as NAFTA signs continue to improve. The tone was once again positive with Lighthizer even making a rare quip to reporters that negotiations were going well. Leaders appear to be pushing for a deal before the weekend but that's not a deadline.
With all eyes on NAFTA, it was the BOC that stole the trading spotlight for CAD after senior deputy Wilkins said in a speech that they discussed removing a nod to gradual hikes in yesterday's statement. Taking it out would imply a faster pace of rate hikes. Ultimately, they left it in but the comment suggests they're more likely to hike faster than to pause, especially if the NAFTA outcome is positive.