It looks like the US is offering Canada a deal
I think a NAFTA deal is close and that could help to underpin the Canadian dollar in the day ahead.
Canadian negotiator Chrystia Freeland left the USTR building a few hours ago and said Canada's positions were very clear and that 'fresh ideas' were needed.
To me, that's another way of saying they'd reached an impasse. Around the same time, Trudeau was out with some comments highlighting that Canada wasn't willing to give up on cultural protections or Chapter 19.
Skip ahead of a few hours and there have been two developments.
1) Trump with some optimism
You need to sort through a lot of rhetoric to find nuggets with Trump but his comments earlier were more optimistic than usual. He said they've come a long way with Canada and now he thinks 'they will treat us fairly'. To me, that's a sign that negotiations are improving.
He later added that a deal could come as soon as today and that we should know in the next 2-3 days.
2) Freeland back at the USTR
After leaving a few hours ago and saying new ideas were needed, Freeland seemed to turn right back around and head to the USTR. I'm guessing that's because the US side has an offer to make.
Now, that offer still might not be enough with Canada but I think the US knows where the red lines are so there must be some convergence.
Now, I could be misreading it and it may all blow up but I think a deal will be made and USD/CAD is vulnerable on the downside.
The risk is that it all blows up tomorrow with the US and China going to war. Tomorrow is the end of hearings on China tariffs and the rumor is that Trump will immediately announce tariffs once that's done with.
