NAFTA wieighs heavily on CAD
CAD has struggled against the Pound of late. The uncertainty surrounding the renegotiation of the North American Free Trade Agreement (NAFTA) has weighed down the looney. If there is one thing the currency market does not react well to it is uncertainty.
The deal in place with Canada, Mexico and the United States is being renegotiated due to Trump’s unhappiness with the current criterion on regulations. He has gone as far as to state it is disastrous and threatened to leave the deal completely.
Since the start of the year the Canadian Dollar has lost over 4% against Sterling. This results in a GBP seller buying CAD gaining as much as CAD 15,800 on a sale of £200k.
Trump feels that US manufacturing is suffering from a lack of employment in the US. Keeping manufacturing in house would be seen as beneficial to the US so renegotiation is key if he wishes to go down to this path. The Canadian economy is heavily reliant on the States for its imports and the Canadian Dollar will be anchored against the Pound until there is some from of clarity. Talks are proving to be troublesome and lengthy.
If you are selling the Canadian Dollar it would be wise to take advantage of current levels.
Inflation data on Friday key to Future BOC Monetary Policy
On Friday we see the release of inflation data and this will be crucial to whether the Bank of Canada (BOC) will consider a rate hike later in the year. A small rise in inflation could lead to a call for a further hike.
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(Daniel Johnson) Thank you for reading.