a close up of a coin© Supplied by Idiot

Regardless of ongoing negotiations heading into the weekend, commerce officers from Canada and the USA have but to achieve a deal on the revised North American Free Commerce Settlement (NAFTA).

Some are speculating {that a} deal may happen as quickly as this weekend; nevertheless, within the absence of extra data from each side, it would assist to take a minute to attempt to perceive what clues the international change (FX) have been revealing in current buying and selling periods.

Following a slide that the noticed the Canadian greenback, affectionately referred to by Canadians because the loonie, lose shut to six% of its worth for the reason that begin of the yr, the Canadian greenback has begun to rally in newer buying and selling and is up simply shy of two.5% from its low on September 5.

That ought to be an encouraging signal for Canadians that talks between Canada and the U.S. seem like making progress.

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Why’s that?

Merely put, a breakdown in talks between the USA and Canada the place the 2 events couldn’t come to an settlement can be unhealthy for each nations.

However that final result would arguably be worse for Canadians if solely as a result of the Canadian financial system is lower than a 10th the dimensions of the U.S, giving us Canucks much less bargaining energy with our southern neighbours when it comes time to dig in and play hardball.

However the truth that the loonie has gained in current buying and selling means that progress between the 2 sides is being made, which might unquestionably be a “win-win” state of affairs for everybody concerned.

Among the many most affected by the continued negotiations are Canadian metal corporations and auto producers.

It’s been fairly clear up so far that President Trump and his administration are very intent on revitalizing America’s manufacturing sector and bringing jobs again to the U.S.

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That agenda begins with the auto sector, which employed a bit of greater than two million People as of final yr.

If the U.S. — by way of tariffs, quotas, or in any other case — is profitable in creating incentives for auto producers to extend the dimensions of their investments south of the border, it may spell unhealthy information for Canadian-based producers, together with Magna Worldwide, Linamar, Martinrea, and others.

These corporations may very well be compelled to vary their methods, together with doubtlessly lowering the dimensions of their workforce, relocating headquarters or discovering new methods to remain aggressive with their U.S. rivals.

Nonetheless, one firm which may stand to profit from a brand new commerce deal is AutoCanada (TSX:ACQ).

If a part of the Trump agenda is to stimulate U.S. auto exports within the Canadian market, AutoCanada, which runs one of many nation’s main auto dealership networks, may find yourself seeing its prices to amass stock slashed.

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That might be greater than welcome information for the beleaguered auto vendor, which has seen the worth of its inventory value fall by greater than 40% this yr, even after experiencing a 30% spike in August final month.

Backside line

There’ll inevitably be those that will come away as winners of any forthcoming commerce deal in addition to those that will take into account themselves the losers.

However a minimum of for now, the FX markets seem like suggesting the anticipated final result from the continued commerce negotiations ought to find yourself being a largely constructive one for many Canadian traders.

At the least in comparison with the place we have been a month in the past…

Keep sensible. Keep hungry. Keep Silly.

Idiot contributor Jason Phillips has no place in any of the shares talked about. Magna is a advice of Inventory Advisor Canada.

Observe @MSNMoneyCanada on Twitter. 


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