US-Mexico Trade Deal Trumps Risk Aversion OANDA MarketBeat Podcast

OANDA Senior Market Analyst Alfonso Esparza reviews the major upcoming market news, macro analysis and economic indicator releases that will impact currencies, stocks other asset classes.

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A trade agreement aimed at replacing NAFTA was struck between Mexico and the United States on Monday.

Canadian Foreign Minister Chrystia Freeland is on her way to Washington to join the talks in the hope of extending the US-Mexico trade agreement to include Canada.

Investors interpreted the deal as a softening of trade tensions that have dominated the market.

Risk appetite was higher at the start of the week as the agreement with Mexico could lead to a softer stance on trade from the Trump administration.

The US dollar is lower against most major pairs on Monday, August 27. The greenback was waiting for U.S. Federal Reserve Chair Powell’s speech at the central bank summit in Jackson Hole on Friday but in the end no new information was provided.

usdcad Canadian dollar graph, August 28, 2018

Chair Powell reiterated the data dependency of the central bank and shared his optimism regarding inflation.

The market is already pricing in two US rate hikes in 2018 and the somewhat dovish remarks from Powell did not add support to the US dollar.

The U.S. Federal Reserve has already hiked twice in 2018 and is on the path to lift interest rates two more times before the end of the year.

The minutes from the August Federal Open Market Committee (FOMC) puts the September meeting as a solid possibility with a December hike still on the table.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza