President Donald Trump speaking with the Mexican president as Trump made an announcement on NAFTA in the Oval Office. Kevin Lamarque/Reuters
The Mexican peso and the Canadian dollar were surging Monday morning after the US and Canada struck an agreement that strengthens the trading relationship of the three North American economic powerhouses.
Video: U.S., Mexico, Canada reach trade deal to replace NAFTA
Trade negotiators for 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, known as NAFTA. It is the largest trade-deal rewrite of President Donald Trumps tenure.
The agreement came just hours before a deadline set by the Trump administration and will now need congressional approval. It follows more than a year of negotiations between the US, Canada, and Mexico over the trilateral agreement.
Trumps agreement with Canada concludes a lengthy negotiation period and adds to the agreement struck in August by the US and Mexico, ensuring continued strong ties among the three nations.
US, Canada NAFTA trade deal, seals trilateral pact with Mexico
The president greeted the agreement as “wonderful” on Monday morning, calling it “a great deal for all three countries.”
The statement went on: “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.”
Canada and the U.S. Have Reached a Deal on NAFTA: Official
“Late last night, our deadline, we reached a wonderful new Trade Deal with Canada, to be added into the deal already reached with Mexico,” Trump said on Twitter, adding that NAFTA would be renamed the United States-Mexico-Canada Agreement.
“It is a great deal for all three countries, solves the many deficiencies and mistakes in NAFTA, greatly opens markets to our Farmers and Manufacturers, reduces Trade Barriers to the U.S. and will bring all three Great Nations together in competition with the rest of the world,” he said. “The USMCA is a historic transaction!”
As the smallest of the three economies, Mexico sees outsize benefits from its trading partnership with the US and Canada.
The peso has rocketed, gaining about 0.7% in trade against the dollar on Monday morning. By just after 10 a.m. BST, or 5 a.m. ET, the currency was trading at 18.54 to the dollar, as the chart below illustrates (this pairing shows the dollars fall against the peso, rather than the pesos gains):
“Investors have been waiting patiently for some good news regarding trade since the US escalated trade tensions earlier this year,” Jasper Lawler, the head of research at London Capital Group, said in an email. “There is clear elation that a deal has been struck.”
Video: Trudeau calls USMCA deal a “good day for Canada”
Canadian dollar up on NAFTA agreement, Nikkei hits 27-year high
The Canadian dollar has followed a similar pattern to the peso, gaining against the US dollar in overnight and European morning trading, though gains have been a little smaller:
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Video: Canada US NAFTA deal