Despite some big moves in global foreign exchange markets, the USD/CAD exchange rate has been firmly stuck on a 1.28 ‘big figure’ for every single minute since mid-afternoon in Europe on Monday. Optimism around a possible NAFTA agreement has helped cap the upside even as a sharp decline in oil prices has been seen over the past two days. WTI crude is down from a high of $69.25 on Tuesday afternoon to just $67.55 yesterday. GBP/CAD on Thursday reached a one-week high of 1.7975 but this morning is back down on a 1.78 ‘big figure’.
Canadian Foreign Minister Chrystia Freeland said yesterday that good progress has been made at the NAFTA trade talks on the key issue of auto rules, though the threat of proposed U.S. steel and aluminum tariffs coming into force next week clouded the mood. According to Reuters, Freeland, U.S. Trade Representative Robert Lighthizer and Mexican Economy Minister Ildefonso Guajardo met for a second straight day in a push to seal a quick deal on revamping the North American Free Trade Agreement. She told reporters, “There is a very strong, very committed, good-faith effort for all three parties to work 24/7 on this and to try and reach an agreement… “I think we made some good progress. We’re very much working on a set of proposals based on the creative ideas the U.S. came up with in March and I think there was good constructive progress.”
Bank of Canada Governor Stephen Poloz yesterday faced the Committee on Banking, Trade and Commerce. It wasn’t scheduled until 4.15pm local time, which meant that his remarks came just after financial markets close for the day. Mr. Poloz said he was "much more encouraged" about the economy than he had been when he last talked to the committee in November 2017. Pressed by one senator about what she called the bank's ‘fairly rosy’ outlook that it issued on April 18, he replied, “When we describe the economy, as you say, in rosy terms, it is, I would say, more like finally positive terms… For the economy as a whole, it has put the adjustments to the oil price shock behind us, but we still have softness in several areas of the country." The Canadian Dollar opens in Europe this morning with USD/CAD in the mid-1.28’s and GBP/CAD at 1.7890.