Carney’s remarks offer modest support for the Canadian dollar, as any easing of the 50% US tariff would lift a weight on Canadian exporters and the growth outlook. The lack of a timeline limits how much a trade-deal premium can build, so USD/CAD is likely to stay more sensitive to the US midterm results and oil prices in the near term. Canada is the largest foreign supplier of crude to the US, so a broader settlement would also reduce one source of uncertainty for North American energy flows. Sectors hit by Canada’s counter-tariffs, including US steel, dairy and farm equipment exporters, stand to gain most if talks succeed.

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Carney is sounding more optimistic about a US trade deal than at any point since talks collapsed in August, but he is careful not to promise one.

Summary:

• Carney said trade discussions with the US will become more intensive
• He said some red lines had been removed but others still need to be addressed
• The US is asking for less and offering more, he said, but the two sides are not there yet
• He said direct talks between negotiators and the USTR are not always needed because good communication channels are open
• The US imposed a 50% tariff on about $20bn of Canadian goods after talks broke down in August, and Canada retaliated
• The comments come as Americans vote in midterm elections

Canadian Prime Minister Mark Carney said trade discussions with the United States will become more intensive. He reported progress in the talks while cautioning that important areas remain unresolved and a deal is not yet done.

Carney said some of the red lines in the negotiations had been removed, but others still needed to be addressed. He described the shift in Washington’s position as the United States asking for less and offering more, while stressing that the two sides were not there yet.

He also played down the need for formal negotiating rounds. He said it was not always necessary for Canadian trade negotiators to be talking directly with the Office of the US Trade Representative, because good lines of communication were open between the two governments.

The comments build on Carney’s update over the weekend, when he said he had held a good conversation with President Donald Trump. He said then that teams from both countries would work over the coming weeks on the outlines of a deal. Trump said last week that he expected a new agreement pretty soon, without giving details.

The talks are trying to repair a relationship that deteriorated sharply in August, when negotiations broke down. Trump then imposed a 50% tariff on around $20bn of Canadian goods, equal to roughly 5.5% of Canada’s exports. Ottawa responded with matching tariffs on US products including steel, dairy, appliances, farm equipment, pulp and paper, and electronics.

Carney’s tone is notably more upbeat than at any point since that breakdown, but his remarks were careful to avoid suggesting an agreement was imminent. His repeated references to unresolved areas and remaining red lines suggest the hardest issues are still on the table, and he gave no timeline for a final deal.

The timing adds a political dimension. Americans vote in midterm elections on Tuesday, and trade tensions with Canada are a live issue in states such as Michigan and Maine. The outcome could shape how much room the White House has to compromise in the weeks ahead. 

The two will cross paths at the APEC Summit in China, in Shenzhen from November 17 to 18

This article was written by Eamonn Sheridan at investinglive.com.

Source: Investing Live - News