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The Canadian dollar rose against the U.S. dollar on Wednesday, reversing earlier losses, after President Donald Trump said he may negotiate separate trade deals with Mexico and Canada.

This is not the first time that Trump had suggested bilateral deals with Mexico and Canada, as he vowed to revamp the 24-year old North American Free Trade Agreement (NAFTA). Analysts said Trump first brought up the idea back in May and June, but Canada and Mexico stuck together.

On Wednesday, Trump repeated it again.

“We have had very good sessions with Mexico and with the new president of Mexico, who won overwhelmingly, and we’re doing very well on our trade agreement,” Trump told reporters ahead of a meeting of his cabinet at the White House.

“So we’ll see what happens. We may do a deal separately with Mexico and we’ll negotiate with Canada at a later time. But we’re having very good discussions with Mexico.”

Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York, said Trump’s comments suggested that “he’s hungry for a deal and a deal (NAFTA) is much closer than what we have presupposed.”

“If Trump thinks he could get a deal with Mexico, it kind of says he has a weaker hand,” Anderson added.

In afternoon trading, the U.S. dollar was down 0.1 percent at $1.3177 against the Canadian unit. So far this year, the Canadian dollar has been down 4.7 percent against a strong U.S. currency.

The U.S. dollar, however, was still up 0.2 percent on the day against a basket of six major currencies at 95.075 .

The Canadian dollar, meanwhile, reversed earlier losses against the euro, which fell 0.3 percent to $1.5341 . Sterling also extended losses, falling 0.6 percent to $1.7206.

Weaker commodity prices earlier pressured the Canadian dollar, a commodity-based currency, but U.S. crude futures recovered in the afternoon session, trading up 1.2 percent at $68.93 per barrel .

Meanwhile, Canadian government bond prices were lower across the curve and yields were higher in line with U.S. Treasuries.

The two-year yield rose to 1.930 percent, compared with 1.918 percent late on Tuesday, while the 10-year was up at 2.141 percent from Tuesday’s 2.123 percent.

The spread between the U.S. 10-year Treasury and Canadian 10-year yields has widened on Wednesday to nearly 76 basis points . The yield gap has been widening since the beginning of the year in favor of the U.S. dollar.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:36am EDT.

SymbolName% changeLast
CADUSD-FX
Canadian Dollar/U.S. Dollar
-0.26%0.73513
USDCAD-FX
U.S. Dollar/Canadian Dollar
+0.26%1.36029

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