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The Canadian dollar advanced on reports that NAFTA talks are making progress. But do not expect a strong move.

Here is their view, courtesy of eFXdata:

MUFG Research discusses CAD outlook around the current prospects of a Canada-US trade deal.

“While we await the decision from Washington on the implementation of additional tariffs, there was some good news on NAFTA negotiations. President Trump and Canada’s Foreign Minister Freeland both indicated negotiations were going well while there are reports that Canada is now willing to move on opening up its dairy sector to some degree. This makes sense as dairy was not cited by PM Trudeau as a redline but it is a key issue for the US,” MUFG notes.

The performance of CAD suggests to us that the market is more positioned for a deal being reached and so we wouldn’t expect a huge move in CAD. With the China decision lingering, the broader market reaction would likely be relatively contained,” MUFG adds.

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