The Canadian Dollar had a very good week as optimism grew on a NAFTA agreement and incoming economic data held up pretty well. USD/CAD began on Monday at 1.2900 and though it moved up to 1.2940 on the initial stock market rout, this proved to be the high of the week. The pair fell 1 ½ cents by the close of business on Tuesday then extended the move to a low on Friday around 1.2740; its lowest level since the end of February. GBP/CAD fell below 1.80 for the first time in three weeks whilst AUD/CAD fell below 98 cents.
A Bloomberg story last Tuesday claimed, “The Trump administration is pushing for a preliminary NAFTA deal to announce at a summit in Peru next week, and will host cabinet ministers in Washington to try to achieve a breakthrough, according to three people familiar with the talks.” A spokesman for Canada’s Foreign Affairs Minister, Chrystia Freeland, would not comment on reports other than to say, “Canada is committed to concluding a modern, mutually beneficial NAFTA as soon as possible.” Speaking to reporters outside the White House, Larry Kudlow hinted a U.S.-Canada-Mexico trade deal could be near. “Everybody wants to solve this the best way they can… We don’t want to hurt businesses. We don’t want to hurt districts. We don’t want to hurt congressmen. And I think, at the end … of my mythical rainbow, they’re all going to come out ahead.” On ongoing talks to negotiate the North American Free Trade Agreement, Kudlow said the three countries are “moving in the direction of a NAFTA deal… I think we’re going to see some very positive news on NAFTA, and maintaining NAFTA, and reforming NAFTA. And, heck, the stock market is going to love that.”
Away from NAFTA and back on the economy, the Canadian manufacturing PMI index rose slightly to 55.7; its 25th consecutive month above 50. Markit said, “The headline PMI reading in March was supported by a robust and accelerated rise in production volumes across the manufacturing sector… with sustained pressure on operating capacity as highlighted by another solid rise in backlogs of work. A number of survey respondents noted that sales growth had outstripped production capacity at their plants in recent months.” Friday’s employment report showed Canada's economy added 32,000 new jobs in March, but the jobless rate remained steady at 5.8 per cent. The economy added more than 68,000 full-time jobs last month, but more than 35,000 part-time jobs were lost. The Canadian Dollar opens in Asia this morning having ended last week at USD/CAD1.2780, AUD/CAD0.9810 and GBP/CAD1.8005.