Canadian dollar gains as NAFTA fears abate; oil slips
By Alastair Sharp
TORONTO (Reuters) - The Canadian dollar strengthened against a broadly weaker U.S. dollar on Monday, as an advisor to U.S. President Donald Trump said Canada has a "very special status" and is unlikely to be hard hit by any changes to the NAFTA trade accord.
Trump pulled the United States out of the Trans-Pacific Partnership on Monday and has threatened to rip up the North American Free Trade Agreement -- signed in 1994 by the United States, Canada and Mexico -- if it cannot be retooled to better serve U.S. interests.
"Canada finds itself, frankly, in a really very special status," Stephen Schwarzman, who heads a business advisory council but holds no formal role in the Trump administration, told reporters after meeting with Prime Minister Justin Trudeau and his cabinet.
The Canadian dollar CAD=D4 settled at C$1.3267 to the greenback, or 75.37 U.S. cents, stronger than Friday's close of C$1.3315, or 75.10 U.S. cents.
"We're getting a more, dare I say, agreeable Trump administration that is leaning towards renegotiating NAFTA as opposed to just outright terminating it," said Bipan Rai, a senior macro strategist at CIBC Capital Markets.
"We do still have the matter of the border tax adjustment, which will be important to keep an eye on going forward," Rai added.
Trump told U.S. manufacturing executives on Monday that he would impose a hefty border tax on firms that import products into the United States after moving American factories overseas.
Canada sends more than 75 percent of its exports to the United States, and the Bank of Canada warned last week there would be "material consequences" if Trump enacts protectionist policies as it left the door open to an interest rate cut. Continued...