The Canadian dollar is trading lower on Tuesday in the aftermath of the historic trilateral trade deal between Canada, the US, and Mexico. The loonie could not sustain the momentum, especially as energy futures tumbled. The buck may now find short-term direction in this weekâs September jobs report and August trade data.
On Sunday, the three nations struck a last-minute trade deal that abandons the North American Free Trade Agreement (NAFTA) in favor of the USMCA. Under the provisions, US farmers will have increased access to Canadaâs dairy market, online cross-border shipments to Canada worth less than $150 will not be subjected to duties, and 75% of the contents of an automobile must be manufactured on the continent.
In a surprise move, Canada also agreed to having a mandated âjoint reviewâ of the 16-year pact every six years, something that Prime Minister Justin Trudeau initially opposed.
While no date has been specified, the USMCA is expected to go into effect in the second half of 2019.
The market is forecasting that the trade agreement will give the Bank of Canada (BOC) ammunition to pull the trigger on a rate hike later this month. Overall, analysts anticipate four interest rate increases by the end of next year.
After settling to their best levels in four years, crude oil prices dropped on Tuesday. November West Texas Intermediate (WTI) crude oil futures slipped $0.17, or 0.24%, to $75.09 per barrel at 18:39 GMT on the New York Mercantile Exchange.
Natural gas prices did surge as November natural gas futures advanced $0.07, or 2.29%, to $3.17 per million British thermal units (btu). An immense Canadian liquefied natural gas (LNG) export project was recently given the final approval, the first of its kind in recent years.
On Friday, Statistics Canada will publish labor numbers for September and trade data for August.
The USD/CAD currency pair rose 0.02% to 1.2815, from an opening of 1.2813. The EUR/CAD plummeted 0.28% to 1.4794, from an opening of 1.4836.
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