CAD: Limited scope of further rally – ING

CAD has enjoyed a mini NAFTA relief rally amid renewed hopes of a preliminary trade deal being struck by early as next week, points out Viraj Patel, Research Analyst at ING.

Key Quotes

“Canadian Foreign Affairs Minister Freeland hinted that an imminent resolution (one way or the other) is likely after noting that NAFTA negotiations are nearing a ‘decisive moment’. With USD/CAD trading back within our estimated short-term fair value range of 1.2750-1.2850 – we think the scope for any additional ‘good NAFTA news’ to drive CAD higher is pretty limited. The onus will instead be on macro releases (trade data today ahead of the March jobs report tomorrow) to elicit any hawkish BoC re-pricing. Expect $/CAD to move back to 1.26 if sentiment over a May BoC hike resurfaces.”