Mexico's President Enrique Pena Nieto has said he would like to get the renegotiated NAFTA trade deal in place prior to 1st of July, when the Mexican elections will be held. Talks are ongoing and don't appear to be reaching a resolution just yet with a main point of contention being tariffs levied on the production of cars and where they need to be built. The table below shows the difference in Canadian Dollars you could have achieved when buying £200,000.00 during the high and low points during trading on Tuesday.
|Currency Pair||% Change||Difference on £200,000|
The North American Free Trade Agreement (NAFTA) is a trade agreement between the US, Canada and Mexico. Trump has complained about the benefits of the deal to the US, stating it is the worst trade deal put in place in history.
He has called for renegotiation which has been going on for some time. The impact of these talks will have major implications on CAD. The US has threatened to leave the deal completely which would seriously damage the Canadian economy considering the US is it’s primary trade partner, not to mention Trump’s new favourite pastime of altering tariffs.
Mexican President, Enrique Pena Nieto would like to get a deal in place before Mexican elections commence on 1st July.
Things are not looking good however, one of the main points of contention is the rules of origin which govern what percentage of a car needs to be built in the NAFTA region to avoid tariffs.
US trade representative, Robert Lighthizer has warned that if talks are extended, approval from the Republican controlled congress may be on “thin ice.”
Mexico’s main auto sector lobby has stated that the US’s current demands to increase North American content to 75% in four years from 62.5% as unacceptable. This does not bode well for the Canadian Dollar and could cause CAD weakness.
Unemployment data is due out on Friday and investors will be keeping a close eye on figures as this can influence monetary policy change. There is expected to be little movement, but if there is any big changes we could see changes in CAD value.
Carolyn Wilkins is the Senior Deputy Governor of the Bank of Canada (BOC). Her role is to oversee the BOC’s strategic planning in regards to monetary policy. Her speech can influence the markets due to this although considering the current situation I would be surprised to hear news of a potential rate hike this year.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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