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Canadian Dollar Declines on Concerns Towards Trump’s Protectionist Approach

January 26, 2017 at 18:49 by Yahia Barakah

Canadian coins on Canadian dollar billsThe Canadian dollar dipped against its US peer on Thursday, as traders worried that the protectionist approach that US President Donald Trump has towards his nation’s economy might harm Canada’s. Trump already took measures that signaled major upcoming changes to US economic policy.

Last Monday, Donald Trump started his first week of presidency by signing an executive order that formally withdraws the United States from the Trans-Pacific Partnership Agreement. The agreement, which includes Australia, Canada, Japan and a number of other countries, was signed by the United States but was never ratified.

Investors are now concerned about another trade agreement that Trump promised to renegotiate during his presidential election campaign; the North American Free Trade Agreement. The agreement, which was put in place in January 1994, ties the economies of Canada, Mexico, and the United States under a set of rules that defines trade and investment between them.

The government in Canada is concerned that changes to NAFTA will hit the nation’s economy hard, since the United States is Canada’s largest trade partner. Prime Minister Justin Trudeau met with his cabinet in Calgary on Monday and Tuesday, in part to discuss Trump’s administration and Canada’s measures to face possible changes to NAFTA. The state of anxiety towards Trump’s policy is weighing down the Canadian currency.

USD/CAD traded at 1.3103 as of 18:25 GMT, after touching 1.3127 at 13:10 GMT, the pair’s highest level for the day. USD/CAD opened trading at 1.3065.

If you have any questions, comments, or opinions regarding the Canadian Dollar, feel free to post them using the commentary form below.

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