After a shaky start, the Canadian Dollar had a pretty good week before Easter, only kept off top spot by the strength of the US Dollar. USD/CAD opened last Monday at 1.2890 and by Tuesday morning in Europe it had fallen 70 pips to what proved to be the low of the week around 1.2820. The next few days saw very whippy price action, albeit within a relatively narrow range from USD/CAD1.2820 to 1.2930. It had many intra-day swings and reversals without really gaining traction in either direction, though this allowed the CAD to strengthen on all of its major crosses as it ended the week around USD/CAD1.2895. Overnight in Asia, the pair briefly touched 1.29 again but the move higher was not sustained and it has subsequently eased back around a quarter of a cent.
Although President Trump’s latest ‘Tweetstorm’ was aimed directly at Mexico, there was also a renewed threat to kill-off the NAFTA accord. Trump said: “Mexico is doing very little, if not NOTHING, at stopping people from flowing into Mexico through their Southern Border, and then into the U.S. They laugh at our dumb immigration laws. They must stop the big drug and people flows, or I will stop their cash cow, NAFTA.” Behind the President’s headlines, however, politicians from the U.S., Canada and Mexico are showing increasing optimism they can reach a deal as negotiators prepare for what would be the eighth round of talks. The U.S. Trade Representative Robert Lighthizer said last week, “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 we can get something done in principle in the next little bit.” Canada’s chief negotiator, Steve Verheul, said he didn’t know what an “in principle’’ deal would look like and “significant gaps” remain. The desire for faster talks hasn’t yet been followed up with Canada and Mexico being given a firm date or an invitation to attend the next round of talks expected in April in Washington.
Away from NAFTA and back on the economy, the week ahead brings the Canadian employment report on Friday, published at the same time as the US jobs report. Before then, today we get to see the manufacturing PMI report for March, which last month stood at 55.6. The Canadian Dollar opens in North America at USD/CAD1.2875, AUD/CAD0.9890 and GBP/CAD1.8105.