The Canadian dollar has been selling off for the past two sessions following NAFTA concerns. Canadian officials believe that the US will pull out of the agreement entirely, according to Reuters. Anonymous sources have claimed that the Canadian government is now planning for a future without NAFTA. A US source claimed that Trump said "I want out" given limited progress. The second-last round of negotiations are scheduled in Montreal later this month. Following the initial news reports, a White House spokesman remarked that there has been "no change in the president's position on NAFTA". While the currency was rallying earlier in the week on rate hike expectations, concerns regarding NAFTA are weighing on the Canadian dollar today. Our short-term trending indicator is currently bullish, while our medium-term outlook is neutral.
The USD/CAD exchange rate is currently above 1.2580. The euro is up against the Canadian dollar, with EUR/CAD currently above 1.5020. The pound is up against the Canadian dollar, with GBP/CAD trading above 1.690.
This is a very light week for economic data releases relating to the currency. The BoC's business outlook survey suggested improving business conditions on all metrics except future sales (+8 vs +19 previously). The report helps the Bank's case for a rate hike next week. Housing starts beat expectations (217k vs. 212.5k expected). Building permits were much lower than estimates (-7.7% vs. -0.3% expected). Later today, we'll get new housing price index numbers. Last week, changes in employment were significantly ahead of expectations.
As the Canadian dollar strengthens on higher crude oil prices and rate hike hopes, we are upgrading the currency to bullish in the medium-term. Looking at a weekly chart, the currency is trading within normal conditions. This is based on various technical indicators on the Canadian dollar currency index.