CTV reports NAFTA a done deal !!!

.

The Canadian Dollar 

As the midnight deadline approached reports were circulating that a NAFTA2 trilateral deal with Mexico -Canada and the US was close and with CTV news confirming  a done deal, the Canadain dollar has strengthened considerably

CTV News

Predictably USDCAD has moved to the   1.2800 initial target level where the street was pricing in a tentative fair value level for the Loonie post-Canada signing the agreement. So, we can assume the first wave of appreciation has been fully priced

Positions are very crowded, so we should expect a bit of profit taking as we await confirmation of the deal from both Prime Minister Trudeau and President Trump. But of course, the devil is in the details however very positive for the Canadian dollar none the less.

A couple of things that should have the Canadian Dollar Perma Bears heading for hibernation.

Last week stellar Canada GDP suggested the Bank of Canada, G-10’s second most hawkish bank next to the Fed,  has room to move interest rates higher.

Oil prices are surging as traders set sights on Brent $ 85 per barrel +

But now I’m now watching LNG!!!

And here is the kicker, and something that   that should not be overlooked in the NAFTA euphoria is  the massive LNG infrastructure  project headed for  Canada as reported by Bloomberg this morning

“Royal Dutch Shell Plc and its four partners have agreed to invest in a multibillion-dollar liquefied natural gas project in western Canada — the largest new one of its kind in years that would carve out the fastest route to Asia for North American gas.” ( Bloomberg)

Bloomberg

This deal suggests the USDCAD could quickly move to 1.2720, the next support level, given the enormity of this infrastructure spend alone. This spend is huge !!!

Indeed the stars are aligning for the Loonie, and likely not too late to get in on this party !!

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes