FX Action: USD-CAD has recouped to the lower 1.2800s
FX Action: USD-CAD has recouped to the lower 1.2800s after posting a four-month low at 1.2782 yesterday, which marked the moment of peak euphoria about the U.S.-Canada trade agreement. The new USMCA deal arrived with much fanfare, and will now take a considerable time before it is implemented (assuming the deal is approval in all three countries). USCMCA also leaves much of the old NAFTA agreement intact, with the biggest differences being made in the diary (which accounts for 0.06% of trade between the U.S. and Canada) and auto manufacturing industries. The rally in the Canadian dollar was a relief action rather than anticipation of increased aggregate growth potential of the Canadian economy. The surge in oil prices, meanwhile, which are now in fresh four-year high territory, has also been a factor underpinning Canada's currency, along with expectations for the BoC to hike rates this month. Overall, analysts anticipate USD-CAD will retain a downside bias. Resistance is at 1.2897-1.2900.