US trade representative Robert Lighthizer has recently stated that the three countries involved in the NAFTA agreement - the US, Canada and Mexico - aren't close to reaching agreement on a new deal. This is likely to impact the CAD long term, with President Trump even intermating that he wishes to make seperate trade agreements with Mexico and Canada. The Canadian Dollar report below discusses the way in which this could affect the trade relationship between the three countries and in turn the Loonie. The table below shows the difference in CAD you could have achieved when buying £200,000.00 during the high and low points of the past 30 days.

Currency Pair% ChangeDifference on £200,000
GBP/CAD2.85%CAD$9,740
The issues inside the UK have been well documented throughout this report, with UK Prime Minster Theresa May coming under increasing pressure once again. With both the EU and members of her own Conservative party openly questioning the viability of her Brexit strategy, market confidence in the UK has dropped once again, with the Pound finding little support this week. Investors risk appetite for the Pound has dipped again following last week’s spike and it is likely that the current air of uncertainty surrounding the Brexit saga, will continue to handicap any major advances for Sterling. How it will react against the CAD is difficult to predict, with the Canadian economy facing difficulties of its own. With Canada yet to agree on a NAFTA deal with the US, who have taken the unprecedented steps of negotiating a sperate arrangement with Mexico, any long-term failure to do so could have serious detrimental effects for the Canadian economy.

Canadian Trade deficit falls but NAFTA still a concern

Yesterday was a positive day for the Canadian dollar as Canada’s trade deficit for April dropped to $1.9bn from $3.93bn. The reason for the fall is that exports have risen to a record high and imports have dropped. However it’s not all positive news for the Canadian dollar as the NAFTA negotiations are back in the spotlight and just recently US Trade Representative Robert Lighthizer stated the three countries (US, Canada and Mexico) are not close to securing a deal. This is no surprise as it was only last month US President Donald Trump announced further tariffs on Canadian and Mexican steel and Aluminium.

With Mexico’s election less than three weeks away, Donald Trump has now stated that the US may start to negotiate with Canada and Mexico separately, however I find it difficult to see how this would work, as Mexico and Canada will want to stick together as they have the same interests. To be kept up to date with how the NAFTA negotiations unfold, contact your account manager.

Unemployment rate to finish the week for Canadian dollar exchange rates

To finish the week Canada are set to release their latest unemployment rate and net change in employment numbers. Unemployment is set to remain at 5.8% and Net change in Employment is set to rise to 20k from last month’s disappointing -1.1k. Throughout 2017, Canadian unemployment numbers dropped from 6.8% to 5.8%, which prompted the Bank of Canada to hike interest rates from 0.5% to 1.25% in the space of 7 months. Investors will be watching this release closely and if Unemployment continues to fall there is an argument another hike could occur sooner rather than later.

Even though the Bank of Canada’s stance has been to hike interest rates due to the positive economic data, I still believe that NAFTA negotiations have the potential to cause major fluctuations for Canadian dollar exchange rates. If Donald Trump runs out of time and decided to pull the plug I would expect the value of the Loonie to drop dramatically.

For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.