President Donald Trump threw a wrench in normal partnerships that many other presidents and global leaders would dare not do, demanding that the U.S., Canada and Mexico renegotiate the North American Free Trade Agreement. That uncertainty cast a shadow over the Canadian Dollar, even as Crude Oil prices have doubled. Will it continue to support USD/CAD?
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The Canadian Dollar is one of three “commodity currencies” in the world’s largest economies, thanks to large Oil and Natural Gas deposits in the country. That ties its economy more closely to the boom and bust of the Oil market than many other leading economies.
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The collapse in Crude Oil prices and uncertainty around NAFTA and the U.S. relationship caused the Canadian Dollar to move in wide swings over the past two years. USD/CAD has traded both above 1.45 and near 1.20 in that time period — a painful 20% range for the closely-linked countries.
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