- US lays out most aggressive Nafta demands to data
- More likely Trump will give notice to withdraw says official
- Reports have weighed on MXN and CAD
The Canadian dollar and Mexican Peso are coming under some selling pressure today following reports that the Trump administration has made its most aggressive Nafta demands to date. With the fourth round of negotiations nearing an end, the US has presented proposals that could be seen as politically unfeasible for its Northern and Southern neighbours to accept.
The Canadian dollar is dropping across the board today despite a rise in the Oil price. Source: xStation
The string of bold proposals set forth by the US in recent days include auto rules of origin, a sunset clause, government procurement and gutting dispute panels seen by the other nations as core to the pact. The latest development shouldn’t come as too much of a surprise as they have been long signaled, but equally so has the Canadian and Mexican opposition to them.
The drop seen in the Canadian dollar is all the more surprising considering the strong gains seen in oil. Brent crude, for instance, is higher by more than a percent on the day after reports that the Kurdistan region has shut around 350k bpd worth of production due to security concerns. The USDCAD pair has moved back above the 1.25 handle today and the market is now firmly above the Ichimoku cloud on D1. Whilst not all of the accompanying lines have confirmed the break higher yet, it is a positive development and could be seen as an early sign of a reversal to the downtrend seen for much of the last 6 months.
USDCAD has broken above an Ichimoku cloud on D1 in what could be seen as a sign of a trend reversal. Source: xStation
The USDMXN has been one of the better performing crosses from a USD perspective in recent weeks with the market recouping a significant amount of the losses seen in the early part of the year. A clean break above the Ichimoku cloud on D1 provided a nice signal to go long shortly after last month’s Fed meeting and the market has now risen by around 8% from the 2017 lows of 17.47.
USDMXN has risen strongly after breaking above the Ichimoku cloud on D1 last month. Source: xStation