Loonie soars in wake of new North American trade deal

Canada, U.S. reach new NAFTA deal with a new name
ABOVE: Canada, U.S. reach new NAFTA deal with a new name.

The loonie soared higher in the wake of news that Canada has reached a deal to join the United States and Mexico in a new North American trade agreement.

The loonie traded higher at 78.13 cents U.S. compared with an average of 77.25 cents U.S. on Friday.

READ MORE: NAFTA deal reached — Canada, U.S., Mexico reach trade agreement under new name

While most economists have been expecting the Bank of Canada to raise its key interest rate target later this month, the trade negotiations have been a key uncertainty.

The central bank had made a point of saying it was closely watching the NAFTA talks and other trade policy developments, which could hurt the economy.

The newly christened the U.S.-Mexico-Canada Trade Agreement, or USMCA, provides increased access to Canada’s dairy market for U.S. producers.

Story continues below advertisement

READ MORE: Here are key details of the new North America free trade deal

It also appears to preserve the key dispute-resolution provisions, while a side letter published along with the main text of the agreement exempts a percentage of eligible auto exports from the tariffs.