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Another Round of NAFTA Negotiations and Trump’s First State of the Union

Published January 30, 2018
  • The most recent round of NAFTA negotiations in Montreal have come to an end without a conclusion. The US did not pull out from the negotiating table and no global agreement has been reached. This round of negotiating had no obvious implications on the USD/CAD pair as the market now shifts its attention elsewhere until the next round of negotiations, Feb 26 to March 6 in Mexico.
  • The US Dollar Index is down ~0.45% today ahead of Donald Trump’s first State of the Union address at 9pm EST tonight. Trump’s first SOTU could weigh on both the loonie and peso depending on his tone regarding NAFTA. Trump’s SOTU will remind the markets of his protectionist policies on trade and it is expected that there will also be a focus on infrastructure and immigration policies. The theme of his hour-long speech to Congress and the nation is, “Building a safe, strong and proud America”.
  • The Federal Reserve begins its two-day policy meeting today; which will mark the last meeting under the leadership of Janet Yellen before she passes the chairmanship over to Jerome Powell.
  • It is widely expected that the central bank will keep interest rates unchanged at 1.50%. Investors will be focusing on their assessment of the economy as well as inflation for hints on the monetary policy outlook. The majority of economists believe that the Fed will hike rates 3 times this year, in March, June, and December.
  • Crude prices fell, extending losses into a second session, as investors looked ahead to weekly data from the US on stockpiles of crude and refined products to gauge the strength of demand from the world’s largest energy consumer. Brent Crude is down 0.40% on the day to $69.00 per barrel and WTI Crude is down 1.25% on the day to roughly $65.00 per barrel at the time of writing.
  • The euro zone’s economy finished off last year with another quarter of robust growth, underlining the view that the European Central Bank will start unwinding its asset purchase program sooner rather than later. The euro pushed higher against the dollar and the loonie today, with EUR/USD rising 0.52% to 1.2444, moving back in the direction of the more than three-year peaks of 1.2537 reached last week. EUR/CAD is up 0.43% to 1.5338 at time of writing.