Loonie likes NAFTA
|Canadian dollar bulls are celebrating. Renewed optimism on NAFTA has pushed USD/CAD lower, as US-Canada trade talks resumed yesterday. Both US President Trump and Canadian Foreign Minister Chrystia Freeland confirmed that negotiations are on track, with both ready to make concessions. USD/CAD continues to weaken amid stronger loonie against major currency pairs. The pair is heading along 1.3035 in the short-term.
Canadian negotiators appear willing to provide restricted access to its domestic dairy market in exchange for a broadening of the trade dispute settlement mechanism, along with cultural protection of Canadian media firms and finally steel and aluminium tariffs. Time is short: an agreement must be reached by end September, as the Trump administration will have to deliver a finalized agreement to Congress, including bilateral (with Mexico only) or trilateral terms, if agreement is found. Political support is at stake. Canadian PM Trudeau’s party strongly relies on Ontario and Quebec, where most dairy farmers are. Trump’s Republicans could face a reversal in November elections if no deal is settled.
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