JPMorgan says it will be a long fall
If the US leaves NAFTA, the Canadian dollar will take a beating, JPMorgan analysts predict.
They say the loonie would fall nearly 10% in a worst case scenario where a deal breakdown also leads to 25% tariffs on autos.
"The worst-case NoFTA could mean USD/CAD at 1.43 as the market prices a
'safety-net' 50bp cut by BoC," they wrote in a note cited by Bloomberg. "A
potential overshoot would also probably be unbound and thus larger
versus the best-case scenario, given the large unknowns."
A rise to 1.43 would be the highest since 2016.
On the flipside, a deal would push USD/CAD down to 1.24, they say.