NAFTA talks between the USA and the Canada resumed on Wednesday following US-Mexico bilateral agreement on Monday.
There was an agreement on new NAFTA terms, which, according to Reuters, include a cap on imports of cars made in Mexico. The deal boosted confidence that the trade war is gradually coming to an end, although the US-China spat remains great. World stocks rallied as NAFTA deal de-escalate trade war concerns.
However, analysts’ doubts for the rally were justified, as Canada left out of the deal. Then, the White House confirmed that the US and the Canadian President agreed to continue talks over NAFTA.
The Foreign Minister of Canada traveled to Washington for NAFTA talks on Tuesday as time is running. Mexican President wants to sign the pact before leaving office at the end of November, before his successor takes over.
She stated that Canadians will stand up for the Canadian national interest and for Canadian values. However, she added, that there are areas where the three countries can find a compromise that everyone can live with.
Despite the optimism, there are some red lines such as intellectual property rights and extensions of copyright protections.
Forex Market amid NAFTA talks
The Dollar index inched up slightly (0.1%), having slipped to a 4-week low overnight. The US-Mexico trade deal eased trade war fears and boosted traders’ appetite for risk at the moment.
The Australian Dollar dropped almost 0.5% against the greenback following signals that the Reserve Bank of Australia might be forced to keep policy stimulatory for longer.
The Euro dropped 0.2% against the US Dollar amid concerns over Italy’s public deficit.
The Sterling remains close to one-year low vs the common currency, ahead of Brexit’s Minister speech. The pound was down to its lowest since August 2017 following May’s said that a no-deal Brexit “wouldn’t be the end of the world”. According to Reuters’ poll, foreign exchange analysts have forecast the pound will weaken to $1.20 in the event of a no-deal Brexit.
Oil traded broadly flat. Although Iranian crude supply decreased ahead of US sanctions there are signs for rise in US inventories. Brent crude futures remained unchanged, while U.S. crude futures rose 5 cents from their last close. Official U.S. inventory and production data (Crude Oil Inventories) will be published later today.
Gold prices dropped today after four, consecutive, days of gains.
Sources: Reuters, CNN money, BBC
PLEASE NOTE The information above is not investment advice.