The Mexican peso is weakening against its major currency rivals at the end of the trading week, driven primarily by the delay in completing the new North American Free Trade Agreement, which is also known as the USMCA. But the pesoâs declines were capped by strong retail sales data for September.
On Friday, Canadian Prime Minister Justin Trudeau and Deputy Prime Minister Chrystia Freeland, who handled trade file as foreign affairs minister, met with Deputy Foreign Minister Jesus Seade. The discussion was meant to finalize key points in the USMCA.
Speaking to reporters prior to the meeting, Trudeau confirmed that there was some additional work needing to be done. The primary hurdle stems from Mexicoâs environmental and labor reforms that the US says do not go far enough, particularly when it comes to enforcement and standards. Seade noted that the government could make modifications to how labor disputes are handled, but the Mexican leadership noted that it would not accept intrusive demands by Washington.
And this is where Canada enters the picture. Ottawa is attempting to encourage Mexico to adopt a Canadian-style system for certifying Unions.
On Wednesday, Seade met with US Trade Representative Robert Lighthizer, telling the media:
Weâre reaching understandings. Weâre now looking at very specific details, but I think weâre heading towards a deal. Everything looks like it’s heading in the right direction.
President Donald Trump and the Republicans have accused the Democrats of stalling on ratifying the trade deal, especially after all three countries signed the deal earlier this year. House Speaker Nancy Pelosi ruled out ratifying the deal next month, suggesting that it could be delayed into the new year.
Meanwhile, on the data front, September retail sales came in at 0.9%, up from the 0.3% in August. This also beats market forecasts of a 0.2% decline. Year-on-year, retail sales have risen by 2.4%.
Also, the Mexican trade deficit narrowed to $726 million last month as imports declined 6.4% and exports fell 1.5%.
The USD/MXN currency pair rose 0.42% to 19.5529, from an opening of 19.4711, at 18:27 GMT on Friday. The CAD/MXN advanced 0.42% to 14.7210, from an opening of 14.6610. The EUR/MXN jumped 0.47% to 21.5388, from an opening of 21.4385.
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