Morning Commentary & Currency Insights – March 21, 2018

NAFTA headlines stating the U.S. has dropped its contentious auto content proposal has pushed USD/CAD back down to the 1.3000 pivot point in overnight trading with North American traders yet to react as this news came out after-hours.  With an FOMC rate hike expected today at 2PM EST this may be a confounding and volatile trading day for the Canadian dollar.  Despite this promising NAFTA news we are likely to see any USD/CAD weakness below 1.3000 met with plenty of people happy to pick up U.S. dollars as the potential for a ratified NAFTA deal being better than what we already have in place is low.  Combined with the Bank of Canada in a holding pattern & weaker economic data, more medium term weakness for our dollar is anticipated.