Mexican peso and Canadian dollar surge after new US trade agreement

US
President Trump speaks to the Mexican president as he makes an
announcement on NAFTA in Oval Office in
Washington.
Kevin
Lamarque/Reuters

• The Mexican peso and Canadian dollar surged on Monday
  after the US and Canada on Sunday evening put the finishing
  touches on a deal to reshape the 25-year-old North American
  Free Trade Agreement (NAFTA).
• Both currencies have bounced against the US dollar as a
  result of the agreement between US President Donald Trump and
  Canadian Prime Minister Justin Trudeau.
• 
  You can follow
  the
  Mexican
  peso
  and
  Canadian
  dollar
  live at
  Markets Insider.
  

The Mexican peso and the Canadian dollar are surging on Monday
morning after the US and Canada struck an agreement that
strengthens the trading relationship of the three North American
economic powerhouses.

Trade negotiators for the US and Canada put the finishing touches
on a deal to reshape the 25-year-old North American Free Trade
Agreement, known as NAFTA, on
Sunday evening. It is the largest trade deal rewrite of President
Donald Trump’s tenure.

The agreement came
just hours before a deadline set by the Trump administration
and will pave the way for a vote in Congress to approve the deal.
It follows more than a year of negotiations between the US,
Canada, and Mexico over the trilateral agreement.

Trump’s agreement with Canada concludes a lengthy negotiation
period and adds to the previous agreement struck in August by the
US and Mexico, ensuring continued strong ties between the three
nations. As the smallest of the three economies, the benefits
Mexico sees from its trading partnership with the US and Canada
are outsized.

The peso has rocketed, gaining around 0.7% in trade against the
dollar on Monday morning. By just after 10.00 a.m. BST (5.00 a.m.
ET), the currency was trading at 18.54 to the dollar, as the
chart below illustrates (this pairing shows the dollar’s fall
against the peso, rather than the peso’s gains):

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“Investors have been waiting patiently for some good news
regarding trade since the US escalated trade tensions earlier
this year. There is clear elation that a deal has been struck,”
Jasper Lawler, head of research at London Capital Group, said in
an email.

The
Canadian dollar has followed a similar pattern to the peso,
gaining against the US dollar in overnight and European morning
trading, although gains have been a little smaller:

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