November 30, 2022

NAFTA: USA and Mexico reached an initial deal putting pressure on Canada

LQDFX news blog: NAFTA: USA and Mexico reached an initial deal putting pressure on Canada

Share this article

The USA and Mexico agreed on new terms over auto trade on Monday reaching a bilateral deal, excluding Canada from NAFTA.

The White House confirmed that the US and the Canadian President agreed to continue talks over NAFTA. The Foreign Minister of Canada will travel to Washington for 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.

Back in June, Trump had offered Canada and Mexico a permanent exemption from the steel and aluminum tariffs if they agreed to U.S. demands on NAFTA.

World stocks rallied as NAFTA deal de-escalate trade war concerns. The U.S.–Mexico deal boosted confidence that the trade war is gradually coming to an end, although the US-China trade dispute remains great.

Investors and traders are now more confident that a global trade dispute may be averted. Therefore, the dollar dived, and equity markets also eased, as investors took on greater risk appetite. Analysts express their reservations for the rally as Canada left out of the deal and trade war with China still alive.

Trade disputes affect investors’ sentiment and have been their big concern since the beginning of 2018.

START TRADING

Forex Market following NAFTA deal announcement 

The Dollar index dropped to its lowest since early August against its major traded rivals; the US-Mexico trade deal eased trade war fears and boosted traders’ appetite for risk. Consumer confidence index due later today can partly determine the dollar’s further moves.

The Canadian Dollar inched up against the US Dollar following announcement about the bilateral NAFTA deal leaving behind Canada.

The Euro was broadly flat against the US Dollar while the sterling hit its weakest against the single currency.

The Sterling tested fresh lows, diving to one-year low vs the common currency, following British Prime Minister’s statements that a no-deal Brexit “wouldn’t be the end of the world”. The pound was mainly flat against the greenback. 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 prices increased towards a seven-week peak amid signs of tighter supply moderate output increase. Brent crude futures rose by 44 cents, while U.S. crude futures rose 17 cents from their last close. Investors are now more cautious about whether the supply will decline or not soon.

Gold prices inched up for a fourth, consecutive, day while silver prices follow.

Sources: Reuters, CNN money, BBC

PLEASE NOTE The information above is not investment advice.