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 had five moves of more than a quarter of a cent yet is net little changed during the period. Three times it has moved back on to a 1.29 ‘big figure’ but twice has fallen back below 1.2875. It really is a frustrating time for traders and it would be unwise to draw any directional conclusions from the price action. Overall, however, the Canadian Dollar has held in pretty well and took silver medal position in our one-day table on Thursday.
According to a Reuters report yesterday, U.S. Trade Representative Robert Lighthizer on Wednesday 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.”
In economic data, today we have the monthly GDP data as well as industrial raw materials prices. RBC is predicting 1.9% annualized GDP growth for the first quarter of 2018, while TD is predicting an even smaller 1.4% rise. That’s in comparison to the 4% increase recorded in the first quarter of 2017. As for the January 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 Asia this morning at USD/CAD1.2910, AUD/CAD0.9895 and NZD/CAD0.9310.