The Canadian dollar strengthened against its major counterparts in the European session on Tuesday, as investors cheered the US-Mexico deal that is intended to replace the North American Free Trade Agreement.
U.S. President Donald Trump also indicated the U.S. would soon begin negotiations with Canada, but suggested that any agreement could be a separate deal. Investors expect Canada too would agree to the new terms to preserve a three-nation pact.
Canadian Prime Minister Justin Trudeau and Trump had a constructive conversation regarding the North American Free Trade Agreement on Monday and “agreed to continue productive conversations,” White House spokeswoman Sarah Sanders said in a statement.
Canadian Foreign Minister Chrystia Freeland is traveling to Washington to resume trade talks with the U.S. later in the day.
Oil prices rose as signs of tighter supply and improving Chinese refining demand helped investors shrug off worries about an economic slowdown because of the U.S.-China trade conflict.
Prices also remained supported after reports that oil producers participating in a supply-reduction agreement have cut output in July by 9 percent more than called for.
Crude for October delivery rose $0.08 to $68.95 a barrel.
Attention now turns towards the weekly U.S. API crude inventory data due later in the day and official data due on Wednesday from the U.S. Energy Information Administration.
The loonie advanced to 4-day highs of 0.9488 against the aussie and 1.5106 against the euro, from its early lows of 0.9532 and 1.5163, respectively. The loonie is poised to find resistance around 0.93 against the aussie and 1.49 against the euro.
The loonie spiked up to near a 3-month high of 1.2896 against the greenback, after falling to 1.2982 at 1:15 am ET. The loonie is likely to challenge resistance around the 1.27 level.
The loonie advanced to 86.09 against the yen, its highest since August 1. On the upside, 88.00 is likely seen as the next resistance level for the loonie.