NAFTA means short CAD? – Nordea Markets

Sandeep Kanihama FXStreet Contributor

Analysts at Nordea Markets point out that since 2016 the deviations between USD/CAD and commodity prices have been driven by a running adjustment of the NAFTA risk premia.

Key Quotes

“USD/CAD has traded substantially above a commodity based fair-value, every time NAFTA has filled a lot in the media coverage, while the CAD rally in the summer of 2017 was accompanied by a pause in the NAFTA headlines.”

“Heading into a week of loads of NAFTA-headlines, would you then prefer to be long or short the CAD? We think that USD/CAD could see more upside, albeit USD/CAD is now again clearly trading with a NAFTA risk premium.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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