Morning Commentary & Currency Insights – January 11, 2018

One headline on Bloomberg yesterday sent the Canadian dollar careening lower – “CANADA OFFICIALS SAID TO SEE ODDS RISING OF TRUMP LEAVING NAFTA”.   Within one minute the currency had lost 0.7% vs the USD as it is clear what the market is concerned about in the long run.  One has to wonder if there was “unofficial” chats between the Bank & government officials to set the record straight as to where their concerns lie as well before the market priced in too much for rate moves.  Regardless, it underlines the current fragility that exists in pricing the correct level for the Canadian dollar and next Wednesday’s Bank of Canada rate decision is by no means a dead meeting.  With market participants weary of whipsaw price action over the past several months look for conservative movements in the currency pair unless any more jolting headlines are released.