The Canadian Dollar surged, hesitated, and then regains some strength as news regarding NAFTA flow through. It remains unclear how Canada would fit in the so called United States-Mexico Trade Agreement, which Trump intends to replace NAFTA with. But there are signs that Canada is not totally out of the picture, whether the eventual agreement is still called NAFTA or not.
Canadian Prime Minister Justin Trudeau’s office said that he talked to outgoing Mexican President Enrique Pena Nieto on Sunday. And they both shared the commitment to reach a conclusion of NAFTA “for all three parties”. Pena Neito also tweeted that “we want Canada’s re-incorporation into talks to achieve a successful trilateral negotiation of NAFTA this week.”
Mexico’s Foreign Minister Marcelo Ebrard also said “in the coming days we will continue in trilateral negotiations with Canada, which is vital to be able to renew the (trade) pact.”
So, things would be very interesting for Canadian Dollar in the days ahead. Technically, the break of channel support is now taken as a sign of medium term reversal. 38.2% retracement of 1.2061 to 1.3385 at 1.2879 is now the first level to target. We’ll see how USD/CAD respond there.
