The Canadian dollar rose 0.55 percent on Wednesday. The loonie is trading at 1.2995 after a softening of trade tensions between the US and China gave way to higher risk appetite for investors.
NAFTA renegotiations will continue later in the week, but as it has been standard in this new round positive comments came from both sides on Tuesday. The news of US Treasury Secretary Steve Mnuchin looking to hold trade talks with China signals a softer approach than the previous threats of more tariffs.
Emerging markets breathed a sigh of relief as the US dollar was lower losing its appeal as a safe haven during times of international commerce disputes. US growth and an tightening of monetary policy by the Fed have supported the USD, but with those factors already priced in, Washington has provided the biggest boost by triggering risk aversion by antagonizing trade partners.
Mexican officials said today that the preliminary agreement was written as a trilateral deal, as it is the preferred outcome. Mexican Economy Minister expecting Canada and the US to reach a deal although he can’t rule out a breakdown in negotiations. Canadian sources spoke about the amount of work needed to close the deal and might be unable to do it in a single session. Next week could be the earliest a deal in principle is agreed.