USD/CAD jumps toward 1.2600 as Loonie tumbles on NAFTA concerns

• CAD and MXN tumbled on report US may pull out of NAFTA. 
• USD/CAD gained almost a hundred pips in minutes. 

The USD/CAD pair rocketed during the American session and peaked at 1.2581, the highest level since December 29. 

The loonie tumbled following a report from Reuters mentioning that Canadian authorities were increasingly convinced that President Trump will announce US withdrawal from NAFTA. It added that Canada plans to stay at the negotiating table even it that happens. According to Reuters's sources Canada is preparing contingencies plans. 

The report also sent the Mexican peso sharply lower. Mexico is the other member of the NAFTA. 

Reversal or just a correction? 

USD/CAD is having today the biggest daily gain since October and the third rise in-a-row. The recent rally pushed USD/CAD into positive territory for the year. 

Last week USD/CAD dropped to 1.2348 after upbeat Canadian jobs data. Since then it has risen almost 250 pips (the last hundred pips minutes ago). Now the pair is about to challenge 1.2600 and the 100-day moving average at 1.2580. Above, the next key area is the 1.2650/60 region: a consolidation on top would signal that the current rally is not just a bullish correction.