If the US leaves NAFTA, the Canadian dollar will take serious hit - J.P. Morgan analysts said.
According to the investment bank, in the worst case scenario, USD/CAD will jump by nearly 10%, reflecting the US NAFTA exit and subsequent sanctions against Canada - 25% cars import duty.
"The worst case scenario," could mean a USD/CAD increase up to 1.4300, as Bank Of Canada will very seriously correct its policy of holding interest rates and QE at current levels.
On the other side, if we have a NAFTA deal JP predict the USD/CAD will fall to the support area around 1.2400.
Comment: If we look at the weekly chart, the trend is on a rise for a year, and the price is in a support zone formed by 200SMA, 38.2% Fibonacci correction of the upward (annual) trend and internal horizon. The levels are convenient to build long-term lobbies, but the risk stemming from Trump's controversial policies remains too high. Long-term positioning is good for us only after the NAFTA solution is in place.
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