The Canadian dollar is trading sideways in the Wednesday session. In the North American session, USD/CAD is trading at 1.2835, up 0.09% on the day. On the release front, there are no Canadian events for a second straight day. In the U.S, ADP nonfarm payrolls is expected to jump to 185 thousand. We’ll also get a look at ISM Non-Manufacturing PMI, which is forecast to drop to 58.0 points. On Thursday, the U.S releases unemployment claims.
After months of intense negotiations, Canadian and U.S officials have finally hammered out a trade agreement on Monday, which paves the way for a new trade agreement between Canada, Mexico and the United States. The NAFTA agreement, which was a pillar of the Canadian economy for 24 years, gives way to the USMCA – the U.S-Mexico-Canada Agreement. Canada and the U.S both offered concessions in order to reach a deal. Canada’s auto sector, which is highly dependent on cross-border movement, will be shielded from U.S tariffs. In return, U.S farmers will be granted increased access to Canada’s dairy market, which has been highly protected. The new agreement is expected to be signed in November and must then be ratified by the legislature of all three countries. This means that the provisions of the USMCA are not expected to go into effect before 2020. The agreement boosted the Canadian dollar, which has shown strong gains of late – the currency has jumped 2.4% since mid-September.
