We mentioned here yesterday that, “traders in the Canadian Dollar market are struggling to get traction in either direction.” Over the past 12 hours, the USD/CAD pair has consolidated on a 1.29 ‘big figure’ and the overall range has narrowed substantially after Thursday’s frequent swings and reversals. Barely 20 pips separate the high and low, but this has allowed to CAD to improve on most of its major crosses with GBP/CAD, for example, almost 1 ½ cents down from Wednesday’s high just below 1.83.
According to a Reuters report yesterday, U.S. Trade Representative Robert Lighthizer expressed optimism that talks to modify NAFTA could be wrapped up quickly but a top Canadian official was more downbeat, saying much work remained. Lighthizer told CNBC television, “I’d say I’m hopeful — I think we are making progress. I think that all three parties want to move forward, we have a short window, because of elections and things beyond our control… But if there’s a real effort made to try to close out and to compromise and do some of the things we all know we should do ... I’m optimistic that we can get something done in principle in the next little bit.” Chief Canadian negotiator Steve Verheul, asked by reporters whether a deal was close, replied: “No, we’ve got quite a bit of work do yet”. Asked whether a deal could be done in April, he replied: “That would be a bit of a challenge.”
The main economic data to be published this week come today with the monthly GDP data as well as industrial raw materials prices. For the January GDP numbers (Canada is to be congratulated for being the only country in G7 to produce official monthly GDP statistics), the consensus is a rise of just 0.1% m/m. The Canadian Dollar opens in North America at USD/CAD1.2910, AUD/CAD0.9895 and GBP/CAD1.8150.