This was the week: Almost a deal all over again
The talks to renew the North American Free Trade Agreement remained the No. 1 mover for the Canadian Dollar. Reports of a “handshake deal” between the US and Mexico on cars pushed the loonie higher, but denials shot it down. While all sides said there is still work to do, they also expressed optimism on a daily basis. The news kept the C$ bid.
Canadian Prime Minister Justin Trudeau joined the chorus of optimism late in the week.
Canadian retail sales slightly disappointed with a drop of 0.2%, worse than -0.1% expected. However, the figure was balanced with an upwards revision.
In the US, Trump was at the center of attention. His criticism of the Fed’s path of higher rates sent the US Dollar lower. The testimony of his former confidant and “fixer” Michael Cohen also weighed. However, the Fed is set to raise rates in September according to the latest FOMC Meeting Minutes.
Also, hopes for a resolution in the trade spat with China went nowhere. The US proceded with imposing tariffs on $16 billion worth of Chinese products, as planned. Duties with $200 billion of goods still loom. The escalation in trade tensions pushes the greenback higher.
Canadian events: GDP report stands out, and NAFTA as always
Any stories about a breakthrough in NAFTA talks will boost the loonie while a deadlock could send it down. The deal is critical to Canada and overshadows everything else.
The week begins with Canada’s current account, which is expected to show another deficit in Q2.
Canada publishes GDP figures on a monthly basis and differs from many other countries. This time, the nation releases the numbers for June, concluding the second quarter. The quarterly figure carries more weight. A slow growth rate of 1.3% annualized was seen in the first quarter, and a quicker pace is likely now.