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 realizes that a lot of work needs to be done. Meanwhile, media report, that a collapse in the NAFTA agreement could hurt heavily US farmers, highlighting the US interests in keeping the NAFTA agreement alive. On other news, Canadian plane maker Bombardier Inc. won a major U.S. case on Friday, as U.S. court rejected a Boeing 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 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 support line and aim for the 1.2100 support level. Should the bulls take the driver’s seat we expect the pair to break the 1.2350 resistance line and maybe even break the 1.2450 resistance zone.