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Thread: Canadian dollar hits four-month high as U.S., Canada reach NAFTA deal

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    Lightbulb Canadian dollar hits four-month high as U.S., Canada reach NAFTA deal

    Canadian dollar hits four-month high as U.S., Canada reach NAFTA deal


    The dollar slipped against the Canadian dollar on Monday as the United States and Canada reached a framework deal to update the North American Free Trade Agreement.

    Sources with direct knowledge of the talks confirmed the two countries reached a deal, which involved offering more dairy access to U.S. farmers as well as Canada agreeing to a side-letter arrangement effectively capping automobile exports to the United States.

    A Mexican source close to the NAFTA talks separately said: "we have a trilateral deal."

    The Canadian dollar rose about 0.7 percent, reaching a four-month high of C$1.2814 as the news about the framework agreement broke, before giving up some gains. It last traded at C$1.2836.

    The loonie added to the previous session's gains of more than one percent.

    "Though markets were already anticipating an agreement, one source of worry will be swept away if a deal is made," Yukio Ishizuki, senior currency strategist at Daiwa Securities in Tokyo, said.

    "That will lead to a rise in trust in the U.S. economy, so it's easy for risk sentiment to improve."

    "The Canadian dollar is really strong today. Together with that, it's easy for currencies from resource-dependent and emerging market countries to rise, putting selling pressure on the dollar."

    Mexico's peso currency strengthened to a seven-week high versus the dollar, at one point gaining about 0.85 percent to 18.54 per dollar.

    The yen , meanwhile, weakened to 113.96 per dollar, reaching its lowest since the middle of November 2017 before paring some losses. It last traded 0.2 percent higher at 113.90 per dollar.

    The greenback has risen four straight weeks against the Japanese currency, including a nearly 1 percent gain booked last week.

    U.S. President Donald Trump's administration had said Canada must sign on to the text of the updated North American Free Trade Agreement before Monday local time or face exclusion from the pact. Washington has already reached a side deal with Mexico, the third NAFTA member.

    The dollar index (DXY), which measures the greenback against a basket of six currencies, edged less than 0.1 percent higher to 95.197, not far off a more than two-week high of 95.366 reached on Friday.

    For the third quarter, the dollar index posted its second consecutive quarterly gain, rising more than half a percent.

    The euro (EUR=) was down 0.1 percent at $1.1595, with worries about a rise in Italy's deficit weighing on the single currency after the Italian government agreed to set a higher than expected budget deficit target.

    The single currency gave up nearly 1.2 percent last week and traded close to a more than two-week low of $1.1569 touched on Friday.

    Source: www.investing.com

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    Default XTREAMFOREX DAILY NEWS

    U.S. Dollar Boosted by Fed, Solid Economic Data, Weaker Euro

    The U.S. Federal Reserve increased the target for the bank’s benchmark by 0.25%, to a range of 2%-2.25%. FOMC members led by Chairman Jerome Powell said the economy is strong enough that aggressive stimulus is no longer necessary. This confidence was shown by the Fed ending its description of its policy as “accommodative”. The divergence between the monetary policies of the hawkish U.S. Federal Reserve and the dovish Bank of Japan helped drive the Dollar/Yen to its highest level since December 21. The Reserve Bank of New Zealand (RBNZ) kept its official cash rate at a record low of 1.75 percent.
    The U.S. Dollar closed higher last week, helped by expectations of rising interest rates, political turmoil in the Euro Zone and better-than-expected U.S. economic data.
    U.S. Federal Reserve Raised Rates Again

    On September 26, the U.S. Federal Reserve increased the target for the bank’s benchmark by 0.25%, to a range of 2%-2.25%. A majority of Federal Open Market Committee members also said they expect another rise before the end of the year. This was also the bank’s eighth rate hike since 2015, continuing its policy of gradual rate hikes.
    FOMC members led by Chairman Jerome Powell said the economy is strong enough that aggressive stimulus is no longer necessary. This confidence was shown by the Fed ending its description of its policy as “accommodative”.
    Powell also said the rate hike reflected the Fed’s confidence in the U.S. economy, describing it as a “particularly bright moment”. Powell also warned that a permanent shift to a “more protectionist world” would hurt the U.S. and global economies, but added that for now, he expects the overall economic impact to remain relatively modest. “We don’t see it in the numbers,” he said at a press conference in Washington after the meeting.
    ed Predictions
    Fed officials now expect the U.S. economy to grow by 3.1% this year, faster than the 2.8% forecast in March, according to the projections released after the meeting. Their predictions for inflation remained unchanged at around 2%.
    The FOMC forecasts showed Fed officials expect about three rate hikes in 2019 and one more in 2020, which would lift the central bank’s important Fed funds rate to about 3.4% that year.
    Euro

    Helping the U.S. Dollar climb to a two-week high against a basket of currencies was a weaker Euro. The single-currency was pressured nearly all week, settling at 1.1604, down 0.0146 or -1.25%. Concerns about the Italian budget weighed on the Euro.
    The EUR/USD fell below $1.16 for the first time in two weeks after Italy’s government agreed on a budget seen by some investors as defying Brussels. Political wrangling over the budget in heavily indebted Italy put a lid on the Euro’s recent rally. Earlier in the week, the Euro spiked higher to 1.1816 after ECB President Draghi spoke of improving inflation figures. However, he killed that rally when he said the news should have no effect on the central bank’s plans to start raising rates after the summer of 2019.
    Read more:https://www.xtreamforex.com/academy/...ry/forex-news/

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