Loonie Flat as NAFTA Hope is Cancelled by Oil Drop

The Canadian dollar is nearly flat on Thursday despite the US dollar falling against other major pairs. Trade war fatigue has the greenback on the back foot and the loonie was higher as NAFTA negotiations restarted yesterday. US President Donald Trump on the Organization of the Petroleum Exporting Countries (OPEC) not doing enough to keep crude prices low put downward pressure on the commodity.

NAFTA talks continue today between the US and Canada with both sides remain optimistic but an agreement does not seem to be in the cards in the short term. Canada is facing pressure from the US and Mexico as both have political timelines that have to be met to insure a quick approval. Canadian Foreign Affairs Minister Chrysta Freeland remains committed to get the best deal for Canada and after 13 months of negotiation will not compromise for the sake of a quick deal.

usdcad Canadian dollar graph, September 20, 2018

CAD traders will be tracking Canadian inflation and retail sales data that is due out tomorrow at 8:30 am EDT. The consumer price index is forecasted to show a monthly loss of 0.1 percent but still on track to a yearly 2.8 percent pace. Retails sales are anticipated to show a more robust economy with a jump of 0.6 percent. The data will put an October rate hike by the Bank of Canada (BoC) firmly on the table if it beats expectations.

NAFTA soundbites have been few and far between with only general comments. Prime Minister Justin Trudeau and US President Donald Trump have been in contact throughout but there appears to be still a lot of work from both sides to reach an agreement.

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza