As noted by analysts at Goldman Sachs, there are three major medium-term factors arising from the USMCA agreement that will see some movement in the FX space.
Key highlights
GS analysts predict that the USMCA agreement will be a moderate tailwind for the MXN thanks to trilateral trade factors that see Canada unlikely to be left out of the ratified agreement.
USMCA could also see the CAD continue higher, with the writing of the USMCA coinciding with an already-expected rate hike by the BoC in the works.
As US protectionism narrows in the North American theater, other global regions can expect an increase of pressure from the US to conform to their whims, and even rising US-China trade war tension could see long-dated selloffs back off the table before long.
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