Canadian dollar soars following USMCA trade deal

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The Canadian dollar soared to a four-month high against the U.S. dollar after the nail-biting last-minute deal to salvage the trilateral NAFTA trade pact. So, what’s next for Canadians? Quite possibly another Bank of Canada interest rate hike.

The new United States-Mexico-Canada Agreement (USMCA) largely leaves the broad North American Free Trade Agreement intact and maintains current supply chains that would have been fractured under weaker bilateral deals.

The Bank of Canada has raised interest rates four times since July 2017. Chances of another hike in October have climbed to 84 percent from 77 percent before data on Friday showing stronger-than-expected domestic economic growth in July.

The loonie, which posted its biggest gain in four months last Friday, touched its strongest since May 22 at 1.2788.

A report that Royal Dutch Shell Plc. and some partners have approved a $31 billion liquefied natural gas project in western Canada could also provided support for the loonie.

The price of oil, one of Canada’s major exports, was supported by supply concerns before U.S. sanctions against Iran come into force next month. U.S. crude prices were up 0.1 percent at $73.31 a barrel. -CINEWS

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