According to Mark McCormick, North American Head of FX Strategy at TD Securities, one of the major questions following last week’s developments was how Trump might divert the news cycle.
Key Quotes
“We are seeing early signs that instead of going on the attack the deal maker might want to start checking off some campaign promises.”
“This is probably the best context to frame the NAFTA talks, as the US looks to muscle Canada into a new deal.”
“The US has threatened auto tariffs and NAFTA termination if Canada doesn’t budge, suggesting that it will eventually agree to terms.”
“Given the lack of a risk premium priced into CAD, we don’t see much room for a relief rally and look to buy into the dips.”
“A broader implication is whether the NAFTA reboot ushers in a period of less global trade turmoil as Trump soothes relations with the EU.”
“A pivot to the deal-maker from the trade crusher would reinforce the peak USD narrative as the risk premium gets priced out of G10FX.”
“The EUR would be the biggest beneficiary, which would look to retest 1.1850 on a break of 1.17.”
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