Dollar/CAD is looking for a new direction after consolidating earlier. What’s next? Here is the view from BTMU:

Here is their view, courtesy of eFXnews:

BTMU FX Strategy Research notes that CAD has been undermined in the near-term by renewed concerns over the ongoing NAFTA negotiations.

“In the latest round of talks, the US has put forward more radical proposals for change which are likely to be unworkable for Canada and Mexico. The US proposals include: i) a sunset agreement which would require NAFTA being reapproved every five years, ii) changes to the “rules of origin” to raise the proportion of value added by member countries, iii) changes to the dispute settlement under NAFTA to prevent rulings from being binding on the US,” BTMU adds.

“If NAFTA trade tensions continue to build in the coming months it will pose upside risks to our USD/CAD year-end forecast of 1.2500. The Canadian dollar currently appears fairly valued based on the current price of oil.

However, USD/CAD could rise closer to the 1.3000-level if the market begins to price in a larger NAFTA risk premium,” BTMU argues.