The Canadian dollar weakened on Friday, but the loonie is still on track for its biggest weekly gain in about five months. The currency recorded gains on surging oil prices, but they were capped on reports that the US and Mexico might exclude Canada from a trade deal, especially with the month-end deadline on the horizon.
Earlier this week, it was reported that the US and Mexico want to reach a trade deal by October 1, and that if a pact is not reached by then, they are willing to exclude Ottawa. But, according to senior sources who spoke with CBC News, Canadian negotiators are willing to play spoiler and miss the deadline. They note that the external political pressure is not enough for Canada to meet any agreement.
Prime Minister Justin Trudeau has already stated that he would sign a renewed North American Free Trade Agreement (NAFTA)Â if it was not âgood for Canada,â which suggests protecting culture, supply management, and third-party dispute resolution mechanism.
President Enrique Pena Nieto wants a deal done before his successor, Andres Manuel Lopez Obrador, takes office. Mexico’s chief NAFTA negotiator, Kenneth Smith Ramos, wrote on Twitter:
Mexico stated from the beginning of the negotiation that the ideal scenario is for NAFTA to remain trilateral.
We hope the U.S. and Canada will conclude their bilateral negotiation shortly. If that is not possible we are ready to advance bilaterally with the U.S … the agreement in principle that we closed with the U.S. is positive for Mexico because it preserves free trade and modernizes our trade agreement.
President Donald Trump wants to get a renegotiated NAFTA completed before the upcoming US midterm elections.
Energy prices have been supporting the loonie in recent weeks as October West Texas Intermediate (WTI) crude oil futures surged $1.07, or 1.56%, to $69.67 per barrel on the New York Mercantile Exchange. US crude prices are on track for a big weekly gain of 3%.
On Friday, Statistics Canada reported that the ratio of Canadian household debt to income ballooned to 169.1% in the second quarter of 2018, up from 168.3% in the January-to-March period. The Bank of Canada (BOC) has routinely warned over the years that household debt risks crippling the national economy, particularly as interest rates gradually normalize.
The USD/CAD currency pair rose 0.21% to 1.3028, from an opening of 1.2998, at 16:00 GMT on Friday. The EUR/CAD fell 0.05% to 1.5188.
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