The dollar remained near one-month lows against the euro on Tuesday, but gained against the yen after a U.S.-Mexico deal aimed at overhauling the North American Free Trade Agreement boosted appetite for riskier assets.
The agreement put pressure on Canada to consent to new terms in order to preserve a three-nation pact, which could revive economic uncertainty caused by U.S. President Donald Trump’s repeated threats to ditch the 1994 accord. Ayako Sera, Tokyo-based market strategist at Sumitomo Mitsui Trust Bank, said the U.S.-Mexico deal slightly eased concerns about an escalation of international trade tensions for now.
“It isn’t the case that the trade problems between Mexico and the United States have been completely solved. Going forward, Canada will become involved, so there are still parts that are hard to predict,” Sera said.
“Sino-U.S. trade problems haven’t been solved yet and it remains unclear what Canada will do in relation to the agreement.”
