Canadian Dollar Surges on Prospect of New Trade Deal with US

The Canadian dollar strengthened against the US dollar after President Donald Trump's announcement that he had reached a new trade agreement with Canada and paused a new wave of tariffs. The Canadian dollar traded at US$1.388 in early morning trading Wednesday in Europe, firming up against its US counterpart in anticipation that trade tensions between the countries would ease somewhat.

The strengthening of the Canadian dollar may have been supported by climbing oil prices, as some traders view it as a petro currency. Brent crude, the international benchmark, was up by about 0.5% to US$91 a barrel, taking its one-week gain to more than 4%. Brent's 12-month gain is 38%.

However, beyond the modestly stronger dollar, there was little sign that an effective ceasefire in the Canada-US tariff battle would trigger similar deals among other trading partners. Analysts and economists were cautious about the agreement, noting a pattern of Mr. Trump announcing trade or tariff deals only to see them watered down, delayed, reversed or only partly implemented.

Canadian Chamber of Commerce chief executive officer Candace Laing said that the three-day tariff pause offered some relief to businesses but left a lot of questions open. 'The limbo state is not anyone's preferred outcome,' she said in a statement. Prime Minister Mark Carney did not say that the deal was done, only that substantial progress had been made.