Yahoo Finance NAFTA Negotiations Extension Drives Mexican Peso, Canadian Dollar Higher
There were no major U.S. reports on Tuesday, but there were major events that drew the interest of traders.
Trade officials said Tuesday they were extending the negotiations towards a new NAFTA trade deal into next year. This was good news for the Mexican Peso and Canadian Dollar which posted solid gains against the U.S. Dollar.
The two foreign currencies were pressured earlier in the session amid reports that Canada and Mexico would not agree to U.S. demands. However, rather than walk away from the table, negotiators announced they would schedule rounds to discuss revamping the North American Free Trade Agreement, into 2018.
For weeks, investors had been pricing in the possible end of the NAFTA agreement after the U.S. pushed for higher wages for Mexican workers, more U.S. parts in automobiles and changes to Canadian dairy subsidies. However, prices reversed with Tuesday’s positive headline about an extension of the negotiations.
The financial markets also responded to reports that President Donald Trump appeared to signal his support for a tentative deal in Congress to stabilize insurance markets by extending cost-sharing reimbursements for two years – just days after Trump announced that the subsidies, known as CSRs, would be eliminated.
Lawmakers also continued to discuss tax reform, a process which may not be completed until early 2018.
U.S. Equity Indexes
The major U.S. stock indexes finished mixed on Tuesday with most of the focus on the blue chip Dow Jones Industrial Average.
The Dow broke above 23,000 for the first time on an intraday basis before settling just shy of this psychological level. It was just 76 days ago that the Dow first crossed 22,000.
A good start to earnings season is also helping to contribute to the market’s strong gains. According to Thomson Reuters, as of Tuesday morning, 82 percent of the companies that had reported topped Wall Street earnings estimates, while 76 percent had surpassed revenue estimates.
Gold
Gold prices continued to retreat on Tuesday as a stronger U.S. Dollar encouraged investors to take profits after the recent rally drove gold to multi-week highs. Losses may have been limited, however, by concerns over geopolitical tensions in the Middle East and the Korean peninsula.
The dollar was supported by reports that President Donald Trump was favoring a monetary policy hawk as the next head of the U.S. Federal Reserve.
In other news, Boston Fed President Eric Rosengren said the Fed will probably need to raise interest rates in December and then three or four times “over the course of next year”, assuming the U.S. unemployment rate continues to fall and inflation rises.
Crude Oil
U.S. West Texas Intermediate and international-benchmark Brent crude oil finished slightly lower after a mixed trading session on Tuesday. Traders reacted to expectations of high U.S. production and exports offset concerns that fighting between Iraqi and Kurdish forces could threaten the country’s crude output.
This article was originally posted on FX Empire
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