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As for NAFTA, negotiations aren’t exactly going smoothly. Regardless of how costly exiting the trade deal would be for the U.S., Trump seems determined to get out. Although nobody knows how things will play out, Tal is confident that in the near term, it won’t be positive.

Congress can block the President’s efforts to dispose of NAFTA, but Trump is still able to act unilaterally on tariffs, as well as balance of payment and national security issues.

“And with that power Trump can do a lot of damage,” Tal said, noting that two-thirds of small and medium-sized business in Canada have stated that the uncertain trade outlook is impacting their investment decisions.

“The apathy in the forex market to that unfolding reality is mind boggling,” the economist said, forecasting an even steeper decline in the loonie, with USDCAD expected to hit $1.33 in the first quarter of 2018.

“Interest rate spreads have pretty much taken over as the driver of the Canadian dollar in 2017,” said Doug Porter, chief economist at BMO Capital Markets.

He suspects the BoC will wait until at least March to hike rates again, as that is when some of clouds of uncertainty will have parted in terms of OSFI’s rule changes on mortgages, and NAFTA.