The US and Mexico have reached a deal to overhaul the NAFTA agreement, increasing pressure on Canada to join the agreement. The key issues seem to include new terms on autos trade, dispute settlement and agriculture and should Canada agree, a new trilateral NAFTA agreement could be formed.
Mexico’s economy minister Guajardo stated that the deal would have to be tweaked should Canada not join, however analysts point out that it would still stand. Canada’s Foreign minister Freeland will be travelling to Washington today in order to continue negotiations and her spokesman stated that Canada will only sign the agreement if it is good for Canada. Should there be further positive headlines about the issue we could see the USD strengthening.
USD/CAD dropped heavily yesterday breaking consecutively the 1.300 (R1) and the 1.2965 (S1) support levels, with the 1.3000 (R1) turning to resistance, as the pair corrected during today’s Asian session breaking once again the 1.2965 (S1) level. We could see the pair rise albeit at a slower pace, should the USD strengthen on further headlines about the NAFTA agreement. Please note, that the pair may also prove sensitive to the US releases later today.
Should the bulls dictate the pair’s direction today we could see it aiming if not breaching the 1.3000 (R1) resistance line and should it be breached, the way may be open for the 1.3047 (R2) resistance barrier. On the other hand if the bears take over the pair’s direction, we could see it breaking the 1.2965 (S1) support line once again, aiming for the 1.2925 (S2) support hurdle.
German Interior minister sees progress on migrant deal with Italy.
According to media, Germany’s interior minister Seehofer stated yesterday, that good progress has been made towards an agreement with Italy, regarding the migration issue. The announcement was made after Italy’s deputy Prime Minister Di Maio threatened to veto the EU budget, yesterday. The agreement expected to be reached with Italy, may be similar as the ones with Spain and Greece, earlier this month. Analysts, see the case for a possible progress to ease tensions within the EU, especially with Italy, regarding the issue. Should there be further positive headlines about the migration issue and Italy, we could see the common currency strengthening.
EUR/USD rose yesterday, breaking the 1.1675 (R1) resistance line, however continued to struggle with the level during today’s Asian session. As the upward trend-line incepted since the 15th of August, remains intact we maintain our bullish bias, however bearish tendencies and some corrections may occur as the USD strengthens due to the developments on the NAFTA issue. It should also be noted, that the pair could prove sensitive to US financial releases later today.
Technically the pair’s RSI in the 4 hour chart, continues to be near the reading of 70 implying that the pair may be flirting with an overcrowded long position. Should the market be interested in the pair’s long positions once again, we could see it breaking the 1.1675 (R1) resistance line and aim for the 1.1740 (R2) resistance level. On the other hand, should the pair come under selling interest we could see it reaching out or even break the 1.1623 (S1) support line.
In today’s economic highlights:
In the American session from the US we get the Goods Trade Balance for July and the CB consumer confidence indicator for August, while later on the API weekly crude oil inventories figure will be released. As for speakers, ECB’s Peter Praet will be speaking during the European session today. Also please note that during the Asian session today, bitcoin rose by 220 USD and currently seems to be stabilising. Should you be interested about the news of the crypto-market you can refer to our Crypto weekly outlook, due out later today.