Forex news for North American trading on August 27, 2018:
- Senior US Trade official: US/Mexico have reached a trade deal replacing NAFTA
- Trump: We are going to call this the United States -Mexico Trade Agreement
- US farmers to receive initial $4.7 billion subsidy due to tariffs
- Canada's Freeland headed to Washington Tuesday for NAFTA talks
- US sells 2-year notes at 2.655%
- Lighthizer: US will give up demand for sunset clause in NAFTA
- Pena Nieto hints Mexico and US could move ahead without Canada
- Mexico Pres Enrique Peña Nieto: Looks to complete tri-lateral NAFTA talks this week
- Dallas Fed manufacturing activity for Aug. 30.9 vs 30.0 est.
- OPEC monitoring committee sees 109% compliance
- July Chicago Fed national activity index +0.13 vs +0.43 prior
Markets:
- Gold up $5 to $1210
- WTI crude up 21-cents to $68.94
- S&P 500 up 22 points to 2897
- US 10-year yields up 3.6 bps to 2.85%
- S&P 500 up 22 points to 2897 -- a fresh record
Rumours of a US-Mexico deal on NAFTA started very early in North American trade and they were later proved to be correct. USD/MXN fell 1.5% and risk assets also cheered the progress.
At the moment, the market is optimistic that Canada will join on and a deal will get done in short order. USD/CAD fell 67 pips to 1.2958 and finished near the lows of the day. The US and Mexico seem to have cut a side deal and will basically give Canada a take-it-or-leave-it ultimatum. That's a dangerous spot for the loonie and Freeland will be in Washington tomorrow when we should get our first idea of whether a deal will get done.
EUR/USD put in a solid day in a 60-pip climb to 1.1684. It stalled ahead of offers at the figure after a nice run.
Cable similarly touched just above 1.2900 before settling back under in a half-cent rally that came at the tail end of European trading. Note that it was a holiday in the UK so there could be some re-thinking when London re-opens.
USD/JPY was sluggish despite the better tone on risk. The pair finished down 17 pips to 111.08 but found decent bids at 110.90 in two trips lower.
