NAFTA & BOJ to the Forefront

NAFTA and BOJ news swayed FX on Tuesday while Amazon drama drove the stock market. The Canadian dollar was the top performer while the Japanese yen lagged. Services PMIs from China and Japan are due up next. The latest video for Premium subscribers is found below.  استمرار التداول العرضي؟ (فيديو للمشتركين)

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A NAFTA deal announcement in the next two weeks looms large after several reports saying Trump wants to make an announcement in Peru at a summit starting April 13. It would just be a preliminary deal but it would make a final deal virtually certain. US negotiators likely concluded that dealing with a new Mexican president – likely to be Lopez-Obrador – could be problematic. At the same time, Trump continues to pivot towards a trade war with China and will need help from Mexico and Canada.

The FX market reacted with a 105 pip drop in USD/CAD to 1.2800. That's a sizeable one-day move and the loonie gained more against the euro, yen and sterling but it's still modest compared to the high stakes of a deal. The CAD trade from the Premium Insights is currently over 90 pips in the green.The moves might have been tempered by another tweet where Trump threatened NAFTA.

Speaking of twitter, Trump's crusade against Amazon was the driving force in stock markets Tuesday. It suppressed stock markets for most of the day until a report indicated there were no plans to take any action against the giant retailer. The market ripped higher afterwards and finished up more than 1%.

Looking towards Asia, the yen rallied initially on after comments from Kuroda who said the BOJ was internally discussing an exit from extraordinary programs but won't reveal any details and is wary of sending mixed messages. At some point, the tide will completely turn and the yen will rally like the euro has in the past year but it's still early.

More signs on a pickup in Japanese growth and inflation would spark a quicker move. In the day ahead, the Nikkei services PMI for March is due. The prior was 51.7. A more-likely market mover is the Caixin China servies PMI for March, which is expected to tick up to 54.5 from 54.2.