The Canadian dollar stumbled to its lowest level in six weeks on Tuesday after President Donald Trump suggested that it is not necessary to keep Canada in a new trade deal, a remark that comes a week after reaching an agreement with Mexico. The loonie will now try to find momentum in upcoming economic data.
On Saturday, President Trump tweeted that a fair deal is required, otherwise âCanada will be outâ from any trade agreements. The president also took a shot at the congress, suggesting that lawmakers should stay away from negotiations or he will terminate the North American Free Trade Agreement (NAFTA), which, he says, âwas one of the worst trade deals ever made.â
There is no political necessity to keep Canada in the new NAFTA deal. If we donât make a fair deal for the U.S. after decades of abuse, Canada will be out. Congress should not interfere w/ these negotiations or I will simply terminate NAFTA entirely & we will be far better off…
â Donald J. Trump (@realDonaldTrump) September 1, 2018
….Remember, NAFTA was one of the WORST Trade Deals ever made. The U.S. lost thousands of businesses and millions of jobs. We were far better off before NAFTA — should never have been signed. Even the Vat Tax was not accounted for. We make new deal or go back to pre-NAFTA!
â Donald J. Trump (@realDonaldTrump) September 1, 2018
President Trumpâs tweets occurred after US and Canadian trade negotiators failed to reach an agreement before a key deadline prior to the Labor Day long weekend. With representatives predicting a conclusion to trade deliberations by October at the latest, additional talks between both sides are scheduled to resume on Wednesday. American and Canadian officials have repeatedly stated that they will only reach a deal when it is good for both sides.
Last week, the US and Mexico struck a bilateral trade deal that did not include Canada. In the aftermath, analysts had been optimistic that Ottawa would join the new trade pact, but then talks immediately broke down.
Canada remains one of the biggest trading partners to the US. In 2017, the nations traded more than $670 billion in goods and services.
Investors will now look ahead to key economic reports. In Canada, the Manufacturing Purchasing Managersâ Index (PMI), the Trade Balance, and a Bank of Canada (BOC) monetary policy announcement are slated for this week. In the US, traders will comb through the August employment report, weekly jobless claims, motor vehicle sales, manufacturing data, and the July trade deficit.
The USD/CAD currency pair surged 0.77% to 1.3198, from an opening of 1.3096, at 14:08 GMT on Tuesday. The EUR/CAD edged up 0.08% to 1.5227, from an opening of 1.5214.
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