Market Analyst

Total Content 16

Articles 16


By Ashraf Laidi  |  05/04/2018 15:37

This article looks at international trade deficits, NAFTA and the Canadian dollar

There is far too much scepticism about a NAFTA deal. We understand it, because Trump has caught market players wrong-footed on several occasions in the past year.
There is no doubt that Trump’s action on the international trade are driven by political motives than economics. He’s wrong about how trade deficits work and he’s wrong about all kinds of numbers. The deficit with China isn’t $500 billion (it was $337 bn last year), and that with Canada is much closer to zero than the $17 billion he often mentions. But that’s all beside the point. Even if Trump’s numbers were accurate, the deficit with Canada remains a drop in the bucket and a trade war with Canada doesn’t play to his base.
A battle with Mexico might play better but NAFTA is a three-way agreement so it’s all or nothing. If there were two separate deals, Mexico would be in trouble. Mexico should be sending Canada flowers…free of any tariffs. As it is, NAFTA trade isn’t the US’s big problem, nor is the solution. Trump knows it, despite the rhetoric.

Mexico Caravan Theatre

Have you ever heard of an illegal immigrant caravan going through Mexico before? If you’re like us, the first time you ever heard of it was this week, sometime after Trump tweeted about it. Evidently this is an annual tradition that normally involves about 300 people. This year, the tally reached 1000 so it’s somewhat notable. But keep in mind that there are 11 million illegal immigrants in the US and about 42,000 enter per month, and another 20,000 attempt entry but are detained.

So all the fuss is about the 1000 is nothing but theatre. More aptly, a sham for Trump to flex his military muscles and a set-up for a NAFTA deal.
Mexico will most likely break up the caravan, especially that most riders come from Honduras, hence, there’s no big electoral pay for Mexican politicians at home.
At the same time, Mexican officials will release a few token statements about stopping illegals through Mexico, while Trump can declare victory, thus combining it with a NAFTA announcement next week.

What’s next for USD/CAD?

Things are already lining up for a bounce in the Canadian dollar (further declines in USD/CAD). A NAFTA deal appears to me as 80% done, while markets are estimating it around 50/50. Technically, there is a textbook head-and-shoulders top in USD/CAD, arguing for 1.25 as the next landmark target. The x-factors are the stock market and China. We can expect a short reprieve after the White House said it has nothing more planned at the moment, while Trump’s economic team shifted mode to damage control on Wednesday. Finally, let’s not forget that April has been the strongest month for the Canadian dollar over the last 20 years.

Any information, analysis, opinion, commentary or research-based material on this page is for information purposes only and is not, in any circumstances, intended to be an offer of, or solicitation for, a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any person acting on it does so entirely at their own risk and GKFX accepts no responsibility for any adverse trading decisions. You should seek independent advice if you do not understand the associated risks.



Author's Other Opinion & Analysis

  • No Intervention can stop USD/JPY
    By Ashraf Laidi  |  23/03/2018 15:07

    As USD/JPY breaks below 105 for the 1st time since November 2016, discussions, and predictions on whether Japanese authorities will jawbone the currency are resurfacing.

  • Trade Time-bomb: The 4 Key Events
    By Ashraf Laidi  |  16/03/2018 15:29

    Tension surrounding tariffs

  • Jobs no FX Game-Changer
    By Ashraf Laidi  |  09/03/2018 16:42

    Today’s report is a fresh confirmation of the status quo

  • Euro Sentiment (You’re reading it wrong)
    By Ashraf Laidi  |  07/03/2018 17:16

    Here is a reminder on how to approach a popular metric in a different way.

  • Gold Bulls Want this from Powell
    By Ashraf Laidi  |  27/02/2018 11:08

    With Ashraf Laidi

  • USD Questions & Answers
    By Ashraf Laidi  |  16/02/2018 17:24

    With Ashraf Laidi

  • Dangerous Bottoms
    By Ashraf Laidi  |  09/02/2018 17:40

    As the S&P500 and Dow Jones Industrials Average indices Index post their fourth 10% decline over the past 4 years, we ask whether a violent spike is afoot, or further erosion is underway.

  • Jobs Halt USD Erosion for Now
    By Ashraf Laidi  |  02/02/2018 16:03

    A strong January US jobs report finally saves the day

  • Mnuchin, Draghi & Trump on FX
    By Ashraf Laidi  |  26/01/2018 16:23

    Will president Donald Trump’s comments about a stronger US dollar succeed in boosting the US currency?

  • Yen-Yields Divergence
    By Ashraf Laidi  |  19/01/2018 17:41

    When a long-held market correlation begins to break, we wait to see if the divergence is temporary before making predictions whether the disparity will continue or not.

  • On USD’s Broad Tumble
    By Ashraf Laidi  |  12/01/2018 17:17

    by Ashraf Laidi

  • The Loonie's at it Again
    By Ashraf Laidi  |  08/01/2018 14:23

    By Ashraf Laidi Another stellar jobs report from Canada is the latest driving force behind the Canadian dollar. Will the loonie steal the show again this year?

  • China Goes Easy on Debt
    By Ashraf Laidi  |  20/12/2017 15:00

    By Ashraf Laidi

  • 6 Reasons for the Dollar Decline
    By Ashraf Laidi  |  14/12/2017 12:44

    We delve deeper into the main reasons behind the dollar slump.

  • Gold December Seasonals
    By Ashraf Laidi  |  12/12/2017 15:33

    by Ashraf Laidi

Show More Articles


Open a Demo Account Open A Live Account

Losses can exceed deposits


The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice.

If such information is acted upon by you then this should be solely at your discretion and GKFX will not be held accountable in any way.

  • ForexF
  • IndicesI
  • CommoditiesC

        Login to Market Insight Account

        Your Market Insight account gives you access to the tools that we offer our customers including our
        Technical Studies & Sentiment for your accounts.

        Forgot Password?

        Don't you have a Market Insight account? With a few easy steps you can easily register to Market Insight

        Create a Market Insight's Account

        Your Market Insight account gives you access to the tools that we offer our customers including our Technical Studies & Sentiment for your accounts.


        Thank you!

        Welcome to Market Insight family!

        You have succesfully completed the registration.
        We will send you an e-mail to give you some
        instructions and our Terms and Conditions!
        Our account representatives will be contacting you as
        soon as possible. If you have any further questions
        please do not hesitate to mail us via