The Canadian dollar and the Toronto stock index fell Wednesday amid media reports that the United States will soon announce its intent to pull out of the North American Free Trade Agreement.
Canadian officials say they expect contentious issues as part of any trade negotiation but are ready to work with the USA and Mexico toward an updated NAFTA.
The Toronto Stock Exchange's S&P/TSX composite index unofficially closed down 71.29 points, or 0.44 percent, at 16,247.95.
The next round of NAFTA talks - the sixth so far - will be held in Montreal from January 23 to 28.
The February gold contract gained US$5.60 to US$1,319.30 an ounce and the March copper contract added two cents to US$3.24 a pound.
The Canadian dollar trades down 0.91% at 1.2575 per dollar.
Last fall, U.S. Trade Representative Robert LighthizerRobert (Bob) Emmet LighthizerMORE tried to calm concerns about a withdrawal, saying the Trump administration had every intention of completing the negotiation of an updated NAFTA with Mexico and Canada. The Canadian dollar has performed well against its USA counterpart so far in 2018. The peso fell as much as 0.9 per cent to 19.3963 per United States dollar, before rebounding later in the day. The US is insisting on a five-year automatic termination clause, stricter rules on autos, government procurement and dairy, and the overhaul or elimination of dispute panels.
Canadian officials say if Trump does announce a US withdrawal, it could be a negotiating tactic created to win concessions.
Mexican Economy Minister Ildefonso Guajardo has said that Mexico won't negotiate under duress and will leave the table if the USA initiates the withdrawal process.
Odds Bank of Canada Governor Stephen Poloz will raise interest rates at the meeting next week also declined to 82 per cent on the news, from 87 per cent Tuesday. A party's withdrawal takes effect six months after it provides written notice to the other member countries.
Mr Shenfeld sees the loonie falling to 75 U.S. cents and Mr Poloz slowing the pace of hikes if Mr Trump ultimately quits. "It certainly throws enough doubt on Nafta that it could affect capital spending plans this year".