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The Canadian dollar and Mexican peso are holding onto earlier gains made against the dollar after the White House announced on Wednesday night that it had “agreed not to terminate Nafta at this time”.

The Mexican peso is 1.2 per cent stronger at 18.9661 per dollar, pulling it back from a five-week low against the US currency.

The Canadian dollar is 0.5 per cent stronger at C$1.3543, though it had firmed by as much as 0.6 per cent. The loonie hit a 14-month low on Wednesday and had been under additional pressure since Monday when the Trump administration announced it would impose a 20 per cent tariff on lumber imports from north of the border. As Rabobank put it, the US president has now “thrown a sweetener” to its northern neighbour.

The decision not to pull the US out of the North American Free Trade Agreement came in hastily arranged calls between the three leaders after news leaked that the White House was considering unveiling an executive order laying the groundwork for a US withdrawal. – with Mr Trump instead agreed with his Canadian and Mexican counterparts to “proceed swiftly” with negotiations to update the agreement.

The dollar index measuring the greenback against a basket of global peers is off 0.1 per cent at 98.940.

Copyright The Financial Times Limited 2017. All rights reserved.
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