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USMCA Hopes Drive Peso And Loonie Higher

The Trump administration could finally get USCMA, also known as NAFTA 2.0 pushed through before end of the year. After some mixed wires from CNBC, the news out of DC is that House Democrats and the Trump administration have reached a handshake agreement on USMCA and that a possible...

NAFTA: Next American Fat Tariff Assessment

U.S. and Mexico officials failed to reach a deal on tariffs at the conclusion of yesterday's trade talks. Unless negotiators make major progress in the next few days, tariffs on goods coming into the United States from Mexico will be subject to a 5% tariff. Across the board, tariffs...

Yen Shines Bright As Trump Slaps Tariffs On Mexico

Risk aversion engulfs markets after US unleashes more trade havoc Dollar holds its ground even as Fed easing bets grow further US PCE inflation, German preliminary CPIs, and Canadian GDP due today Yen soars, loonie & peso crumble as Trump fires another tariff salvo Following a relatively calm session yesterday,...

Trade Tensions Rise As Trump Threatens Mexico With Tariffs

The price of benchmark crude oil prices declined to 2-week lows after the EIA released inventory data for the past week. Data showed that crude inventories dropped by more than 282K, which was a smaller decline than the 857k that investors were expecting. The inventories are 5% above the...

“Tarrified” Part III: European Union The Next Target of U.S. Tariffs

Highlights With the USMCA awaiting ratification and trade talks with China nearing conclusion, the U.S. administration has turned its attention to other trade imbalances. The European Union and Japan – partners that have maintained persistent merchandise trade surpluses – are next in the queue. U.S.-EU trade talks are kicking...

What Happens If The USMCA Doesn’t Happen?

Executive Summary The U.S. Congress has not yet ratified the United States-Mexico-Canada Agreement (USMCA). If Congress does not ultimately ratify the deal, the United States could potentially withdraw from the North American Free Trade Agreement (NAFTA). A revocation of duty-free trade between the United States and its North American neighbors...

Attention On Deficit Disorder Sinks Stocks

Attention on deficit disorder sinks stocks Things aren't going to plan in Trump's tariff world with US trade data overnight showing the trade deficit blew out to a 10-year high in 2018. Whether this hardens the President's attitude to a structural deal with the China trade talks or he chooses...

2019: The Year of the Deal

This past year saw the realization of a number of key risks. Tariff talk turned swiftly into action, as the U.S. administration taxed imports on a broad range of products, from solar panels and washing machines, to steel and aluminum, to $250bn of Chinese products. Independent of that risk,...

Avoiding What Might Have Been: The Canadian Implications of USMCA

Highlights The conclusion earlier this month of NAFTA renegotiations with the creation of new U.S. Mexico Canada Agreement (USMCA) removes the cloud of uncertainty hanging over exports and investment. For the Bank of Canada, the result is likely to be an improved economic outlook, and thus a tilt in...

US Rates Move Hier…Again

US rates higher Markets are nervously watching US rates. 10-year yields are now at 3.25% (climbing over 80 bps in a month) with little sight of weakening. 2-year yields are stuck around 2.87%. The economy is growing at 3.2-3.5% with no real loss of momentum. Solid wage pressures increase expectations...

Risk Appetite Dwindles as NAFTA Cheer Fades

There was a risk-off vibe across financial markets today as the initial euphoria over the revamped NAFTA deal faded away. Asian stocks ended mostly lower while European equities are a sea of red this afternoon amid the lack of appetite for riskier assets. Although the new United States-Mexico-Canada (USMCA) deal...

Long MXN On NAFTA 2.0

Renewed worries over Italian budget send EUR lower. Will it last? The US dollar surged across the board on Tuesday morning as market participants expect Donald Trump to bring the trade war with China back under the spotlight. Even safe-haven currencies struggled to resist the broad-based dollar rally with USD/CHF...

Rescued NAFTA Deal Fails To Lift Global Risk Appetite

Global investors remained defensive on Tuesday despite the U.S. and Canada agreeing to a new trade deal ending months of uncertainty and providing a lift to specific assets including the Canadian Dollar and Mexican Peso. Apparently, it was the Canadians who caved in at the 11th hour after more...

Trump’s USMCA – NAFTA 2.0 or Old Wine in New Bottles? And, Prepared for China Too?

Canada and the US eventually reached a preliminary trade deal, named USMCA, just a few hours before the US-imposed negotiation deadline. Obviously, the market was thrilled by the “breakthrough”, evidenced by the rally of Canadian dollar and, to a lesser extent, Mexican peso against the greenback. While there are...

Aussie Little Changed After RBA Monetary Statement

The US dollar was little moved in the Asian session. This followed disappointing Institute of Supply Management (ISM) PMI data. The data showed that the activity of purchasing managers in September was lower than expected. The PMI rose to 59.8, which was lower than the 60.1 traders were expecting....

USMCA Replaces NAFTA – Markets Unmoved

The markets opened on Monday to the news that the United States, Mexico and Canada managed to agree on a new deal. The new trade deal replaces the North American Free Trade Agreement (NAFTA) and is now called the United States-Mexico-Canada Agreement (USMCA) deal. The deal is said to...

THE USMCA: Manageable Concessions, Less Uncertainty

Canada late Sunday joined a reworked, trilateral NAFTA replacement deal. While the United States-Mexico-Canada agreement came somewhat sooner than we were expecting, the details we've seen so far point to an outcome with few surprises. The concessions that Canada made, such as on rules of origin in the auto...

USD/CAD: Meet The New NAFTA, Same As The Old NAFTA

That's definitely the case when it comes to USD/CAD. On Friday, we highlighted the big rally in oil prices and decent GDP data pushing the loonie higher, but the proverbial “elephant in the room” for Canada has been the ongoing NAFTA negotiations. Over the weekend, rumors emerged that the...

USD/CAD Hits Four-Month Lows

The lesson from the weekend drama was that deals can come together in a heartbeat and that deep pessimism might be the time to buy. The Canadian dollar was the top performer Monday while the yen lagged. The US September ISM manufacturing survey was at 59.8 compared to 60.0...

Breakthrough Trade Deal a Major Sigh of Relief

Last night's agreement in principle to update NAFTA under the new banner of the US-Mexico-Canada Agreement (USMCA) may yet contain some surprises buried in its fine details. But, similar to the immediate investor response, we are breathing a sigh of relief this morning. The deal is far from perfect,...

Canadian Dollar Stays Firm on Trade Deal, Sterling Lifted by Brexit Rumor

Canadian Dollar remains the strongest one today as boosted by the new trilateral USMCA trade deal with US and Mexico. Meanwhile, Sterling is shot up by news that UK Prime Minister Theresa May is ready to make a new offer on Irish border on Brexit negotiation. However, no details...

Currencies: US-Canada Trade Deal To Support Further USD Gains Against Other Majors?

Rates: More outperformance of German Bunds vs US Treasuries? The US, Mexico and Canada reached a last-minute agreement to revamp NAFTA. US equity futures gain ground, while the US Note future is a tad weaker. Today's eco calendar contains US eco data and Fed speakers, but we think sentiment will...

Italian Turmoil: Da Capo

Market movers today Politics will remain a hot topic this week. The Italian budget projections will continue to be a theme for financial markets as well as the reaction from the European commission and rating agencies. In the UK, the Conservative Party Conference began yesterday (runs until Wednesday), which is...

Canadian Dollar Soars as USMCA Trilateral Trade Deal Agreed Finally

Canadian Dollar surges broadly today as the an agreement, the USMCA is finally reached with the US to replace NAFTA. Riding on the last week's post GDP rally, the Loonie is enjoying strong bullish momentum. The USMCA news further seal the case for an October BoC rate hike. At...

Canadian Dollar surges as NAFTA agreed

Canadian Dollar surges broadly on news that the US and Canada have finally agreed on a deal to update NAFTA, just ahead of US imposed deadline. The legal text would be published within hours just of meet the deadline for US Congress to to complete before Mexico's outgoing President...

NAFTA Down To The Wire

USDCAD hit a fresh 4-month low at 1.2850 amid optimism over a NAFTA deal following Friday's gains, which were triggered by strong GDP numbers. NAFTA negotiators are pressing to meet a Sunday deadline to complete a trilateral deal. News reports say nearly all of the substantial work is finished....

USD Is Still Very Data-Dependent , So It Will Be Tricky To Trade

US Rates The markets are pricing in a higher probability of the terminal rate over 3.5%, signalling a convincingly hawkish view from last week FOMC. Chair Powell's language around a healthy economy while emphasising data dependency suggests the Fed will continue to hike well into the restrictive territory or at...

Dollar Rebounded from Knee-Jerk Selloff as Fed is More Hawkish than Initial Perceived

Dollar suffered a brief knee-jerk selloff after Fed raised interest rate as widely expected but stopped calling monetary policy as accommodative. But the greenback recovered as the overall announcement wasn't dovish at all. There were indeed more hawkish elements in the details of the new economic projections. For now,...

Trump rejected non-existent meeting request of Trudeau, launched fresh personal attacks

Trump "claimed" he rejected one-on-one meeting with Canadian Prime Minister Justin Trudeau on trade. Additionally, Trump launched fresh personal attacks on both Trudeau and the Canadian team. In response, Trudeau shouldered it and pledged to continue work for a good deal for Canada, but be prepared to walk away. Trump...

Australian Dollar Boosted by Chinese Stocks, Dollar Still Lacks Buying ahead of FOMC

Australian Dollar rises broadly today as boosted by strong rally in Chinese stocks. The Shanghai SSE composite is pushed through 2800 psychological level on news that MSCI is considering increasing A shares weighting significantly. Nonetheless, Aussie is out-performed by New Zealand Dollar for now, on strong rebound in business...