LOONIE RISES SHARPLY AFTER US AND CANADA ANNOUNCE A MAJOR DEAL

World’s markets rose today after the US made a deal with Canada on NAFTA. This was big news to investors because of the volume of trade between the United States and Canada. Every year, the two countries trade goods worth more than $500 billion. The new deal will give American livestock farmers access to the large Canadian market. In exchange, Canada’s auto industry will be exempted from tariffs if the US decides to go in that direction. The new deal will be called USA, Canada, Mexico Agreement. Germany’s DAX rose by more than 60 points while the Dow pointed to a 200-point open. In a statement, US trade representatives said:

USMCA will give our workers, farmers, ranchers and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region. It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home.

The Japanese yen fell against the US dollar after mixed data from Japan. The Tankan All Big Industry CAPEX for the third quarter fell to 13.4% from 13.6% in the second quarter. This was lower than the 14.2% growth traders had expected. The Tankan large manufacturers index fell to 19 from 21 in the second quarter. This was lower than the 22 traders were expecting. The Tankan non-manufacturers index remained unchanged at 22. These numbers show the impact of the ongoing uncertainty on trade to Japan’s economy.

The euro was little moved against the US dollar after mixed data from Germany and EU. Germany’s retail sales in August rose by 1.6% which was higher than the expected 1.5%. On a MoM, the retail sales contracted by 0.1%. The manufacturing PMI in the country fell to 53.2 from last month’s 53.3. Similarly, the EU’s manufacturing PMI fell to 53.2 from last month’s 53.2 while the unemployment rate in the region dropped to 8.1%.

EUR/USD

Last week, after the Fed meeting, the EUR/USD dropped from the high of 1.1814 to a low of 1.1565. Today, the pair was little moved as traders waited for the US employment numbers expected later this week. The current price is below the 14 and 28-day exponential moving average (EMA). The pair has attempted to recover but it has found resistance. Therefore, there is a likelihood that the pair will continue moving lower.

USD/JPY

The USD/JPY pair jumped to the highest level this year after weak economic data from Japan. It reached an intraday high of 114.03. This was a continuation of a rally that started in March this year when the pair reached a YTD low of 104.61. The current price is above the 14 and 28-day EMA. The MACD and the momentum indicators are signalling that the pair has more upsides to go.

USD/CAD

The USD/CAD pair dropped sharply to the lowest level since June this year after the US and Canada announced a new deal. It fell to an intraday low of 1.2975. The downward momentum indicator shows that the pair’s is easing while the RSI is currently at 22, which is a sign that the pair is oversold. While the downward momentum could continue, the pair will likely see some upward movements as short traders take profits.