The Canadian dollar edged higher against its U.S. counterpart on Tuesday as concerns eased that Canada could be hit by any changes to the NAFTA trade agreement and oil prices firmed.
USD/CAD touched lows of 1.3209 and was last at 1.3224, down 0.11% from Monday’s close.
On Monday, President Donald Trump formally withdrew the U.S. from the Pacific Rim Trans-Pacific Partnership (TPP), distancing America from its Asian allies.
He has also said he intends to renegotiate the North American Free Trade Agreement between the U.S., Canada and Mexico in order to better serve U.S. interests.
The Canadian dollar remained supported after an advisor to Trump said Canada has a “very special status” and is unlikely to be hard hit by any changes to the NAFTA trade accord.
Canada sends more than 75% of its exports to the U.S.
Meanwhile, prices of oil, one of Canada’s major exports, rose amid indications that the global market was tightening as lower production by the Organization of the Petroleum Exporting Countries and other big exporters drained stocks.
Meanwhile, the dollar backed away from seven-week lows against a basket of the other major currencies, but concerns over Trump’s protectionist economic policies limited gains.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.25% at 100.21, after falling to 99.88 overnight, its lowest since December 8.
The fall in the dollar reflected concerns over a lack of clarity on Trump’s economic policies and fears that his protectionist stance could hit corporate profits and act as a drag on growth.