On the 23rd January, the NAFTA negotiations will resume which could be problematic for Canada and consequently have a negative impact on Canadian dollar exchange rates.
NAFTA, which is the North American Free Trade agreement, is an agreement between the US, Canada and Mexico and it allows all three countries to trade with one another for free. Since Donald Trump’s appointment he has made it clear that the NAFTA trade deal is the worse trade deal in history and he plans to make change as soon as possible.
Donald Trumps argument is that the US imports outweigh their exports due to the cheap labour in Mexico and many manufacturing jobs have been lost to the cheap labour. If Mr Trump cancels the agreement he will need this passed through the Senate, which could put pressure on the Canadian dollar and US dollar exchange rates. For clients that are selling Canadian dollars it may be worth taking advantage of current levels before the negotiations begin.
In other news the Bank of Canada hiked interest rates yesterday from 1% to 1.25%. The BoC explained the reason for the hike was high inflation and improved consumer spending. The Royal bank of Canada are now forecasting that the BoC could hike interest another 3 times this year to 2%. If Canada remains part of NAFTA this prediction could come true however I am skeptical as I believe the US President will take this issue to the Senate at some in the next 6 months.
If you are buying or selling Canadian dollars this week, month or year and I haven’t covered your currency pair I would recommend emailing me with the currency pair (CADUSD, CADGBP, CADAUD) and the reason for the transfer (company goods, property purchase) and I will response with my forecast and the options available to you [email protected]. Alternatively if you would like to discuss your requirements over the phone call 01494-787478 and ask to be put through to Dayle Littlejohn.
** If you are already using a brokerage and would like to know if you are receiving the best rates possible email me with the exact figures and I will reply with our live price. This will take you a few minutes and in the past I have saved clients thousands! **