Canada increasingly believes Trump will withdraw from NAFTA, sources say

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The Canadian dollar and Mexican peso are getting whacked following a Reuters report suggesting Canada is convinced President Donald Trump will pull the United States out of the North American Free Trade Agreement.

Shares of companies and ETFs that benefited under NAFTA are falling after a report that President Trump could announce an exit from the long-standing trade agreement.

- $47 billion in agriculture trade between the US and Canada in 2017. They also express doubt whether the U.S. Congress would approve such a move. The loonie later made up most of those losses.

Those obstacles include several USA demands that both Canada and Mexico view as unacceptable: more-restrictive rules-of-origin for autos, the elimination of a dispute resolution process for antidumping and countervailing duties and a five-year sunset clause on the treaty as a whole.

The sixth round of negotiations is set to take place from 23-28 January 2018, in Montreal, Canada.

"The Canadian government is aware of the possibility that President Trump may announce the United States's withdrawal from NAFTA", a senior government official told AFP on condition of anonymity.

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The Canadian dollar trades down 0.91% at 1.2575 per dollar.

Reports of NAFTA's possible demise, meanwhile, sent the Canadian and Mexican currencies tumbling, and the USA dollar rising from Can$1.2432 at 1200 GMT to Can$1.2554 at around 2030 GMT.

Earlier in the session, the 10-year yield had touched its highest since September 2014 at 2.231 percent.

The source said Canadian ministers felt a withdrawal could be created to show Trump's base that he was keeping his promises and also to put pressure on the negotiators.

The Canadian dollar fell to its lowest this year against the greenback as worries about the outlook for NAFTA tempered bets for a Canadian interest rate hike next week.

Constellation Brands is an global beer, wine and spirits company with operations in U.S., Mexico and Canada.

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