Investing.com - The yen fell while the U.S. dollar gained on Tuesday after the U.S. and Canada secured an agreement late Sunday night to replace the North American Free Trade Agreement (NAFTA) deal.
The USD/JPY pair gained 0.03% to 113.95 by 11:30AM ET (03:30 GMT). The Japanese currency was reportedly weighed down by improved market sentiment following the NAFTA announcement.
The yen is now near its lowest in more than 10 months against the dollar.
"Overall, I do think the yen is acting as a proxy to risk...115 will definitely be a level that I don't think will be so easy to break through," said Bart Wakabayashi, Tokyo branch manager at State Street Bank. "You're probably looking at 114.70 as a pretty strong resistance level that will probably see some selling emerge, whether it's profit-taking or people trying to lock in their rates."
The U.S. dollar index, which tracks the greenback against a basket of other currencies, inched up 0.04% to 94.96.
The gain in dollar came after the US and Canada reached a new trade deal, along with Mexico, to replace the NAFTA.
“It is a great deal for all three countries,” Trump wrote on Twitter Monday. He added that the new deal could solve the many “deficiencies and mistakes in NAFTA, greatly opens markets to our Farmers and Manufacturers, reduce Trade Barriers to the U.S. and will bring all three Great Nations closer together in competition with the rest of the world.”
U.S. President Donald Trump will hold a news conference on the new trade deal later in the day in Washington.
The AUD/USD pair was up 0.04% to 0.7228 on Tuesday as traders awaited another round of the Reserve Bank of Australia's (RBA) interest rate decision due later in the day. While little to no change is expected from the RBA, traders will still be looking into the finer details of the central bank's statement.