USD/CAD: NAFTA negotiations are set to resume - Scotiabank

Analysts at Scotiabank explained that the CAD remains quiet, consolidating within its relatively tight multiweek range from late April. 

Key Quotes:

"NAFTA negotiations are set to resume in Washington and U.S. officials appear intent on reaching a resolution over the next 1-2 weeks. An agreement would add to near-term CAD support heading into the next Bank of Canada policy decision on May 30."

"Comments from BoC Dep. Gov. Lane have been constructive, highlighting a ‘better track’ for global growth while signaling ongoing concerns relating to trade policy uncertainty."

"Domestic rate expectations are firm with OIS pricing nearly one full 25bpt rate hike by July and another by October."

"Yield spreads are steady and commodity prices are providing CAD support."

"Our current fair value estimate for USD/CAD lies closer to 1.2580."