Collinson FX: Oct 2, 2018 - Last minute NAFTA deal
by Collinson FX 4 Oct 2018 01:32 NZDT
4 October 2018
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Collinson FX: Oct 2, 2018 - Last minute NAFTA deal
Markets surged overnight after a last minute deal over NAFTA was completed right on the 30th September deadline. Canada has agreed to the deal that the US and Mexico had previously settled. There has been agreement over Canadian dairy tariffs and Automobiles. The new agreement will be called United States Mexico Canada Agreement (USMCA Agreement). Trade has been the major risk to international markets and this is a major step forward. India and Japan are also negotiation bi-lateral trade agreements, so China remains the only major hold out. The Canadian Dollar recovered, along with the Mexican Peso, despite the resurgent Dollar.
European markets also gained ground with the risk-on news. The turmoil surrounding ‘Brexit’ continues with no agreement in sight. The Conservative party conference has thrown up more controversy over the structure of ‘Brexit’. The GBP retreated back to 1.3040, while the EUR slipped below 1.1600. Manufacturing data from Europe was flat, while the US data was steady, as the Dollar shows support from US monetary policy.
The AUD held above 0.7200, while the NZD struggled to hold above 0.6600, despite the resurgent reserve. Trade exposed currencies remain vulnerable to the US/Chinese lack of agreement, but is seems only a matter of time before the Chinese come to the party.
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