USD/CAD Canadian Dollar Rises on Softer US Trade Talk

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.

usdcad Canadian dollar graph, September 12, 2018

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.

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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