Dollar Strengthens Following USMCA Deal

CBJ — The Canadian dollar moved immediately higher after news broke that Canada reached a deal to join the United States and Mexico in a new North American trade agreement, which will now be called the United States, Mexico, Canada Agreement, or USMCA.

The dollar soared above 78 cents early Monday morning.

Bank of Canada governor Stephen Poloz has made a point of watching the trade negotiations and other trade policy developments.

Among other things the new USMCA provides increased access to Canada’s dairy market for U.S. producers, which had been a major stumbling block throughout the negotiations. However, as a concession Chapter 19 — the dispute-resolution mechanism will remain, despite the U.S. wanted to have it removed. The main text of the agreement also exempts a percentage of eligible auto exports from the tariffs.