Canada’s foreign minister has said that trade talks with the United States are going well. These discussions also include plans to work closely with Mexico. The goal is to improve supply chains and ensure energy security. Ongoing conversations show that these countries are committed to enhancing their economic relationships.

Reducing Political Risk

These positive discussions indicate a decrease in political risk between the United States and Canada. For traders, this suggests a good opportunity to sell volatility in Canadian assets, as uncertainty often diminishes with favorable diplomatic news. Recently, Canada’s volatility index, the VIXC, has been around 17, and this news might push it closer to its average of 14. The Canadian dollar, which has been struggling against the USD, could gain support from this development. As of August 2025, the currency has had difficulty staying above $0.72 USD due to global growth worries. This news may be a reason to buy call options on the CAD, aiming for a rise back to the $0.735 level seen earlier this year. This progress is especially important as we approach the CUSMA trade pact review set for mid-2026. Early signs of cooperation can help reduce fears of major political conflicts later, which has been a significant market concern. This reduction in risk makes long-term bullish positions more appealing.

Emphasizing Energy Security

Focusing on energy security sends a strong message to the Canadian energy sector. U.S. imports of Canadian crude oil are already up by 4% year-over-year through July 2025. Plans to deepen this trade relationship are very positive. Traders should think about buying call options on Canadian energy ETFs or major producers. Additionally, strengthening supply chains will benefit logistics and manufacturing companies across the border. Rail volumes for firms like Canadian Pacific Kansas City have steadily increased throughout 2025. This news supports that trend, making bull call spreads on key industrial stocks a smart move for the upcoming weeks. Create your live VT Markets account and start trading now.

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