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By xemarketanalysis September 6, 2018 11:12 am
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    XE Market Analysis: NAFTA Remains in Intensive Care


    • Forex investors are cautious as they watch to see if the US expected will follow up on President Trump's promise to slap new taxes on Chinese imports  
    • The Canadian Loonie is under pressure as NAFTA negotiations continue
    • Gold adds nearly $8.00 to move back above $1,205


    The Mexican Peso remains under severe emerging market contagion effects. The currency has lost almost 1.25% of its value against the US Dollar this month. With US and Canadian officials still behind closed doors negotiating a new-NAFTA deal, we expect the pressure to increase further. There is also a lack of clarity over the recent bilateral agreement between the US and Mexico which is keeping investors nervous.


    Currency market moves are relatively subdued ahead of US job numbers which are due to be released tomorrow. Investors also prefer to remain on the sidelines, waiting for trade-related cloud cover to dissipate. The US Administration is expected to follow through with a new round of tariffs on Chinese imports. This move will be a massive move and will trigger seismic retaliatory actions from Beijing. The Canadian Loonie is the worst G-110 performer this morning with the officials are still wrangling over NAFTA 2.0. Uncertainty over EM and Brexit has pushed gold back above $1,200, up 0.55% on the day.


    The British Pound remains calm after being whipsawed yesterday on noises surrounding deal on Brexit. The currency is expected to remain volatile and to be heavily influenced by incoming Brexit developments. UK Services PMI business expectations are at its lowest level since the EU referendum.


    The Euro-Dollar pair hasn't changed much from yesterday’s close. Provisional readings from Destatis showed new orders fell 0.9% in July in the Euro area. This number will be revised again and failed to inspire investors to commit to significant bets on the currency. We expect the pair to trade along global market sentiment.


    USD/CAD remains close to the key 1.32 barrier with investors opting to play safe ahead of jobs data and news on NAFTA negotiations. The Bank of Canada, as widely expected, has left its rates on hold at 1.5%. Today, the focus will be on Governor Council Wilkins. She is due to speak before the STEP and her comments on exports, NAFTA and uncertainty could inject some trading impetus.


    AUD/USD is struggling to hang onto the 0.72 mark as investors fret over the incoming new wave of US tariffs on Chinese imports. The pair sank to its lowest level in more than two years this week. Uncertainty over global trade and emerging market turmoil is expected to keep the currency under pressure.


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