Trumps demands are unrealistic in regards to NAFTA
The Canadian Dollar lost ground against the majority of major currencies recently following poor retail sales and inflation data. There is also the matter of the renegotiation of the North American Free Trade Agreement (NAFTA). Donald Trump feels that the current agreement is not beneficial enough for the US and has called Canada and Mexico to the negotiation table.
The uncertainty surrounding the outcome of the deal is putting pressure on the Canadian Dollar. There is even the potential that the US could withdraw from the deal completely which would be catastrophic for the Canadian economy with the US being its primary trade partner. Talks are not progressing well and another round of talks is scheduled to take place in Mexico City in late February or early March. Bad news is better than no news in the currency market so we could see further losses for the Canadian Dollar until there is more clarity on the renegotiation of NAFTA.
We saw the release of Canadian GDP today and there was little movement as the data matched expectations at 0.4%. The next significant data release of significance would be unemployment figures which could create volatility if they come in away from expectations. Keep an eye on their release next Friday.
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