The Canadian dollar, which enjoyed its biggest weekly gain since April last week, is posting modest gains on Monday as investors are bracing for a week of tense North American Free Trade Agreement (NAFTA) talks. Officials are being pressed to reach a deal, especially with Mexicoâs president-elect about to take office and the US holding midterm elections in November. Traders feel that the added pressure might lead to a conclusion, lifting the loonie.
NAFTA negotiations are not being held on Monday, but they will resume this week because the October 1 deadline is approaching. Although sources have revealed that Canada is willing to play a spoiler and wait beyond the deadline, reports suggest that both American and Mexican lawmakers are pressing Ottawa to be kept in a trilateral pact.
Last month, the US and Mexico struck a bilateral trade deal, temporarily lifting the hopes that Ottawa might soon strike a deal.
Should the US and Canada fail to get an agreement completed this week, then both sides will be at an impasse. President Donald Trump has already threatened to move forward without Canada, but policymakers, including House Speaker Paul Ryan (R-WI) and House Minority Leader Nancy Pelosi (D-CA), say that Canada needs to legally be a part of a three-nation deal.
In addition to warning he would leave Canada out of a pact, President Trump has said his administration is ready to institute tariffs on Canadian auto exports to the US.
Many observers are unaware as to what the remaining disputes are. The core issues appear to be dispute panels, cultural exemptions, US access to Canadaâs dairy market, cross-border shopping, and intellectual property.
Because NAFTA seems to be on standby, the governing Liberals are focusing their attention on the passing of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). But the Opposition Conservatives are vowing to keep NAFTA front and center of the national conversation.
Erin O’Toole, the Conservative foreign affairs critic, told reporters last week:
You’re going to hear the Conservatives be louder. It is a crisis. Canada’s backed into a corner. So we are worried the Trudeau plan has not worked. We don’t go to Washington to have our political discussions for Canada.
Any further gains were capped by lower energy prices as October West Texas Intermediate (WTI) crude oil futures dipped $0.13, or 0.19%, to $68.86 per barrel.
The USD/CAD currency pair tumbled 0.22% to 1.3012, from an opening of 1.3041, at 16:27 GMT on Monday. The EUR/CAD surged 0.48% to 1.5214, from an opening of 1.5141.
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