The dollar weakened against the Canadian dollar as investors saw the revamped trade accord as good news for its economy. Photo: Lee Jin-man/Associated Press
The U.S. dollar rose against the euro and fell against the Canadian currency as investors focused on international trade.
The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, rose less than 0.1% to 89.74. The dollar fell 0.7% against the Canadian dollar to 78.04 U.S. cents while advancing 0.2% against the euro to $1.1578.
The U.S. currency weakened against the Canadian dollar as investors viewed the deal on a revamp of the North American Free Trade Agreement as good news for the economies of Canada and Mexico. The pact also removes some of the tension surrounding global trade, and could offer a template for how the U.S. approaches trade skirmishes with Europe, Japan and China, analysts said.
Discord between U.S. President Trump and Canadian Prime Minister Justin Trudeau raised concerns about whether the parties could come to an accord by Sunday, which was the deadline for reaching an agreement.
A deteriorating climate for global trade has been one of the factors underpinning the surprising strength in the U.S. currency since early this year, as investors have flocked to the safety of the world’s reserve currency as rising trade tensions have threatened to slow the pace of global economic growth. The rising dollar has surprised investors, many of whom had entered the year betting that it would repeat last year’s decline against the euro.
The agreement removes “a big bubble of uncertainty” hanging over the heads of investors, said Brian Daingerfield, a macro strategist at NatWest Markets. “There’s a template there for a situation going from very poor to resolution” fairly quickly.
The dollar was supported by its gains against the euro after U.K. officials took issue with what they said was disrespectful treatment of Prime Minister Theresa May during Brexit negotiations by European Union leaders. The more difficult the separation of the U.K. becomes, the more likely it is to hinder European growth, some analysts said.
The dollar rose 0.2% against the yen, reaching ¥113.93.
Write to Daniel Kruger at [email protected]