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USMCA should provide support fad CAD near-term but momentum still down – MUFG

What to watch for in the new NAFTA headlines

MUFG Research discusses CAD outlook and flags a scope for some limited support from the latest USMCA reports which add to trade deal optimism.

“Trade deal optimism has also been encouraged by positive comments
from Nancy Pelosi overnight who stated that the Democrats were “within
range” of an agreement with President Trump to allow Congress to vote on
the USMCA trade deal with Canada and Mexico.. Passage of the USMCA deal before next year’s Presidential election would be a supportive development for the Canadian dollar and Mexican peso and help further ease trade policy uncertainty,” MUFG notes. 

“In the FX market, USD/CAD is currently testing resistance at
between the 1.3300 and 1.3400 levels which has previously held in
August, September, and October.

The positive USMCA headlines should reinforce technical
support for the Canadian dollar in the near-term as well. However,
recent momentum remains to the downside for the Canadian dollar with USD/CAD having rebounded after hitting an intra-day low of 1.3042 at the end of October,” MUFG adds.

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