The Canadian dollar has paused from this week’s mini-rally. In Wednesday trade, USD/CAD is trading at 1.2940, up 0.08% on the day. On the release front, Canada publishes current account, with the deficit expected to narrow to C$15.3 billion. The U.S releases Preliminary GDP for Q2, which is expected at 4.0%. The initial GDP report came in at 4.1% in July. We’ll also get a look at Pending Home Sales, which is forecast to drop to 0.3%. On Thursday, the U.S publishes personal spending and unemployment claims.
With the dramatic news that the U.S and Mexico have reached agreement on a trade deal, the focus now shifts to Canada. Ottawa must now deal with President Trump, who has made no secret that he will demand concessions from Canada before entering into a new NAFTA agreement, or else stick to the bilateral deal with Mexico. Canadian officials are not happy that the two other treaty partners reached a deal without them, as this puts the pressure on Canada to show flexibility, such as lowering dairy subsidies, or risk being left out of the club. Still, the markets are enthusiastic about the deal between Mexico and the U.S, and the Canadian dollar has risen steadily since Friday. If Canada does reach a deal with the U.S, traders can expect the Canadian currency to continue to climb.
