The Canadian dollar is mostly higher today. CAD is currently the strongest against safe havens including the US dollar and the Japanese yen. Yesterday, the currency initially moved lower during US trading hours as riskier assets such as equities and commodities sold off. Later in the day, the Canadian dollar made back some of its losses following a Bloomberg news report that claimed President Trump is looking to end NAFTA negotiations in two weeks time.
Turning to the latest news, ongoing NAFTA negotiations remain the biggest short-term driver for the Canadian dollar. Yesterday, Mexico's economy minister claimed that the three countries have made significant advances on reworking NAFTA. Over the coming days, he expects an agreement on the basics of a deal according to a Reuters report. Ildefonso Guajardo also claimed that the US was looking for a "quick solution", echoing yesterday's Bloomberg story. According to Guajardo, it's also clear that the US "didn’t want an eighth round [of trade negotiations]." Our short-term outlook on the Canadian dollar is neutral, while our medium-term outlook is bearish.
The USD/CAD exchange rate is currently above 1.2880. The euro is flat against the Canadian dollar, with EUR/CAD currently above 1.5870. The pound is also flat against the Canadian dollar, with GBP/CAD trading above 1.8140.
This is a fairly light week for Canadian economic data. Markit manufacturing PMIs for March (55.7) met expectations. Later today, we’ll see the trade balance for February. On Friday, we’ll see housing starts and changes in employment for March. Last week, Canadian GDP growth figures for January missed expectations.