The USDCAD opened up with a gap lower today which was understandable as all the attention of the markets over the last few days has been on the NAFTA deal. This is an important deal for the US and especially Canada as a lot of the Canadian economy depends on its trade with the US. Trump had initially, few months earlier, threatened to scrap off the deal and this had hit the CAD pretty hard during that period. But as it happens with diplomacy most of the time, the later versions of the statements and the negotiations following those have seen an increasingly watered down picture of the agreement emerging.
The Canadian economy has since received a boost over the last few days as the talks have progressed in a quick and positive manner, as far as the CAD is concerned, and this has been reflected in the way the CAD has been gaining in strength during this period. Today we are seeing the USDCAD pair trading in the 1.28 region as of this writing as it has been buoyed by the news coming in saying that a NAFTA deal has been reached and that the Canadian PM has called for a meeting of his cabinet to discuss the developments and also to ratify the agreement as well.
This is likely to keep the CAD buoyed for the short term but the region around 1.28 is likely to prove to be a hard nut to crack during this period. Hence it is likely that we are going to see the pair continue to consolidate and range, as the market digests the developments over the weekend and also evaluates the final agreement that had been reached and also studies its impact on the Canadian economy.
This article was originally posted on FX Empire
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