Over the last few days, USD/CAD has settled in a 1.2280-1.2390 range with investors keen to get a sense of how the NAFTA uncertainties so ably summarized by BoC Governor Poloz last week might be resolved. Having reached a high around 1.2375 around the end of the Asia session, USD/CAD fell around half a cent during the European morning today as the EUR and GBP both rallied against the USD.
Trade ministers from Canada, Mexico and the United States ended the sixth round of NAFTA negotiations in Montreal on Monday, agreeing some progress was made but acknowledging that tough challenges still lie ahead to strike a new deal. US Trade Representative Robert Lighthizer said while some progress was made, he hoped it would accelerate and achieve major breakthroughs. "This round was a step forward, but we are progressing very slowly," he said. This was because trilateral negotiations are more "complicated and contentious" than bilateral talks. Nevertheless, in his closing remarks, Lighthizer said, “Some real headway was made here today… We're committed to moving forward." Canadian Foreign Minister Chrystia Freeland, said she was “pleased” with progress made this week. “There is still a significant gap on a number of issues, and we are going to be working extremely hard, extremely energetically with our two partners to try to close those gaps,” she said at an individual press briefing.
After the relief that NAFTA talks haven’t completely collapsed despite plenty of outstanding differences between the three negotiating teams, investors can now focus on upcoming economic data releases. We get the monthly GDP and industrial production numbers on Wednesday and the manufacturing PMI survey on Thursday. The Canadian Dollar opens this morning in North America at USD/CAD1.2320, AUD/CAD0.9975 and GBP/CAD1.7395.