On Monday, the Canadian Dollar retreated against its US counterpart as tensions over negotiations to modernize North American Free Trade Agreement (NAFTA). Canada and Mexico are struggling with tough demands by the United States to bring major changes to the pact, which is increasing the odds that it will not survive. The currency traded between C$1.2471 and C$1.2558. The weakness came even as Oil prices, Canada’s major export, edged higher amid fighting in Iraq’s Kirkuk Oil region.
On Tuesday, the Dollar surged against its peers, supported by a rise in Treasury Yields following a report that US President Trump was favouring Stanford economist John Taylor seen as more hawkish than current Chair Janet Yellen, to head the Fed. Moreover, the release of better than expected US data helped support the Dollar. The New York Fed’s empire state current business conditions was 30.2 in October 2017, its highest since September 2014.
Meanwhile, the British Pound fell against the Euro, as bets that upbeat data this week would put the Bank of England on track for a rate rise by year-end were offset by concerns over Britain’s exit from the European Union. Brexit negotiations are heading for a catastrophic breakdown unless the EU signals this week that it will allow talks to move on to trade. Meanwhile, British Prime Minister Theresa May and European Commission chief Jean-Claude Juncker agreed over dinner in Brussels on Monday that the pace of negotiations over Britain’s departure from the European Union should be stepped up.