Progress In The NAFTA Negotiations
IronFX | Jan 29, 2018 05:46AM ET
Progress in the NAFTA negotiations
- Officials seem to have made some progress regarding the NAFTA Agreement and a will hold a press conference, most probably, later on today. US Trade representative Lighthizer stated that he is hopeful about the talks, however, he realizes that a lot of work needs to be done. Meanwhile, media report that a collapse in the NAFTA agreement could heavily hurt US farmers, highlighting the US interests in keeping the NAFTA agreement alive. In other news, Canadian plane maker Bombardier Inc (TO:BBDb won a major US case on Friday, as a US court rejected a Boeing (NYSE:BA) complaint. Government officials, stated that the court ruling underscores the importance of free trade at a time when the NAFTA negotiations move at a slow pace. Mexico Economy minister Guarjado said that, there is a window of opportunity to strike a deal from February to July and it could be implied that negotiations could continue beyond the deadline of March and close to the Mexican elections. We expect any positive news or outcome of the negotiations to strengthen USD, CAD, MXN, as all three economies have to gain on a win-win-win situation.
- The USD/CAD moved in sideways manner in the past few days, staying mostly below but close to the 1.2350 (R1) resistance line. We see the case for the pair to continue to trade in a sideways manner in the short term, with a light bearish tone, as it could remain under the downward trend line which started to formulate since the 19th of December. Should the bulls take the reins on the pairs direction, we could see it breaking the 1.2250 (S1) support line and aim for the 1.2100 (S2) support level. Should the bulls take the driver’s seat, we expect the pair to break the 1.2350 (R1) resistance line and maybe even break the 1.2450 (R2) resistance zone.
BREXIT negotiations could accelerate
- UK Brexit negotiators could attempt to launch a new round of Brexit negotiations as early as next week in an effort to agree a swift deal on the transition period. The EU negotiating team reaffirmed its readiness to accept the UK team any time this week. The aim is for an interim accord by March 22-23 when the EU leaders will hold a summit. On other news the Brexit law is about to be discussed in the UK upper house, as pressures on Theresa May increase. Any positive news regarding the Brexit negotiations could have a positive impact on GBP.
- Cable posted some gains on Friday, however it had a gradual correction later on to drop below the 1.4175 (R1) resistance level. We see the case for the pair to continue to trade in a slightly bearish tone for the short term as the pair seems to be testing or even breaching the upward trend line, which marked the pair’s direction since the 11th of January. The case is also supported by the 1 hour chart time-frame of the pair, where the price seems to test the 100 moving average line which had supported the price since the 11th of January. Should the pair come under selling interest, we could see it breaking the 1.4040 (S1) support line and aim for the 1.3875 (S2) support barrier. On the other hand, should the pair come under buying interest, it could break 1.4175 (R1) resistance line and aim for the 1.4325 (R2) resistance hurdle.
Get The News You Want
As for today’s other economic highlights:
- During the US session we get the US Personal Consumption Expenditure index for December and later on New Zealand’s Trade Balance also for December.
As for the rest of the week:
- On Tuesday, we get Germany’s HICP rate and the US Consumer Confidence.
- On Wednesday, all eyes will be on the Fed as the FOMC will decide on it’s interest rate.
- And the star of the week will come no Friday as the US Employment report for January will be released with the Non-Farm Payroll figure and is expected to move the market.
GBP/USD
Support: 1.4040(S1), 1.3875(S2), 1.3785(S3)
Resistance: 1.4175(R1), 1.4325(R2), 1.4460(R3)
USD/CAD
Support: 1.2250(S1), 1.2100(S2), 1.9300(S3)
Resistance: 1.2350(R1), 1.2450(R2), 1.2585(R3)
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