CAD: NAFTA threats still press

CAD: NAFTA threats still press

2019-11-11 • Updated

On August 28, the CAD reached the highest level against the USD since the beginning of June 2018. The rise of the CAD was caused by the breakthrough in the NAFTA talks. The US and Mexico ended up with the new trade agreement.

Up to now, the Canadian dollar has been heading higher. But does it mean that all threats have passed? Of course, not. The agreement is reached only between the US and Mexico. Talks between the US and Canada haven’t started yet. As a result, up to now, US-Canada negotiations are the major driver of the CAD.

As usual, there are two options. The first one is when the US and Canada come to a new agreement. Another one is if countries are not able to resolve differences.  

  • In the first case, there are two options for Canada either it will join the US-Mexico agreement or it will make a new agreement with the US. As a result, the Canadian dollar will be able to appreciate further.

Let’s have a look at the technical side. USD/CAD has already tested below the second pivot support at 1.2921. Until there is no news on the negotiations with Canada or the market is calmed with positive news on the agreement, the pair will be able to stick below 1.2921. The next support is at 1.2856. However, it will be a very strong support for the pair as 200-day MA lies there. Moreover, on the weekly chart, we can see that 1.2921 and 1.2856 are the strong supports for the pair as well as 200-week and 50-week MAs lie there. Therefore, there are odds of the pair’s reversal.


  • Another scenario is highly negative for the CAD. Mr. Trump said that he doesn’t want the agreement with Mexico to be called NAFTA anymore. As a result, we are witnesses of the end of the NAFTA. That’s why it’s highly important for Canada to come to an agreement with the US and Mexico. In case of no-deal, not only the lack of agreement will hurt the Canadian economy but also the US actions. Mr. Trump has already said that if Canada denies the agreement, the US will impose tariffs on its autos.

If Canada doesn’t join the agreement, USD/CAD will turn around. The pair will move to resistances at 1.2973 and 1.2990 (100-day MA). A weakness of the US dollar index will stop the pair from the further rise. However, if the USD is able to recover, the pair will break resistances and will exit the pivot support area.

Making a conclusion, we can say that the trade agreement remains the major driver of the CAD this week. The further direction of the USD/CAD pair will depend on the results of the talks between the US and Canada. In case of the agreement, the CAD will appreciate. In case of the disputes between the countries, the CAD will fall.


Oil Market Outlook
Oil Market Outlook

Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.

What will move the market on September 6-10?
What will move the market on September 6-10?

Last Friday’s NFP was disappointing. The reaction of the markets was astonishing. Will it last longer? Let's find out the main trade opportunities for the upcoming week.

Latest news

USD: Powell Speaks on Cutting Interest Rates
USD: Powell Speaks on Cutting Interest Rates

Jerome H. Powell, the Federal Reserve chair, stated that the central bank can afford to be patient in deciding when to cut interest rates, citing easing inflation and stable economic growth. Powell emphasized the Fed's independence from political influences, particularly relevant as the election season nears. The Fed had raised interest rates to 5.3 ...

WTT: Currency Pairs To Trade In April
WTT: Currency Pairs To Trade In April

Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.

Deposit with your local payment systems

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.


A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera