US President Donald Trump took tough stances in both situations. First, he stated that there was no need to keep Canada in the North American Free Trade Agreement (NAFTA) and then warned Congress to not interfere with the trade talks, lest he terminates the trilateral trade pact altogether. Trump also notified Congress of his intent to sign a bilateral deal with Mexico after talks between Washington and Ottawa soured.
Meanwhile,the dollar index against a basket of six currencies edged higher to 95.182 as of 0100 GMT on Monday, after rising during the past two sessions. The US currency has a tendency to attract safe haven bids in times of market turmoil and political tensions.
Bart Wakabayashi, Tokyo branch manager at State Street Bank, stated markets were tentative overall as trade tensions between the United States and China were providing “quite a major scene”.
“I think it’s not a revelation to say that we’re more concerned about the spillover of those discussions…That’s always going to be overhanging (in a) negative way on the markets,” he said.
Trump is reportedly ready to impose tariffs on an additional $200 bn worth of imports from China after the public comment period on the plan ends on Thursday.
The pound shed about 0.3% to $1.2923 after the EU’s chief Brexit negotiator Michel Barnier warned that he is strongly opposed to the UK government’s so-called Chequers proposals on future trade.
Sterling, which has come off from a four-week peak of $1.3043 hit on Thursday, dipped as low as $1.2892 before retracing some losses as optimism over Brexit faded.
The euro was down about 0.1% at $1.1595, extending its slide of the past two sessions.
The yen, another ‘safe haven’ currency, advanced about 0.1% to 111.02 yen.
The Australian dollar was 0.1% lower at $0.7187 on trade worries, lingering near a low of $0.7177 reached on Friday, its weakest level since January 2017.