Canada's dollar surged against its U.S. counterpart on Monday after the U.S. and Canada reached a trade deal to replace the existing North American Free Trade Agreement.

The loonie rose 0.9 percent to 1.2793 per U.S. dollar. It also hit its highest level since late May against the greenback.

(Lower value equals stronger CAD)

The new deal is expected to be named the United States-Mexico-Canada Agreement, or USMCA for short, a senior U.S. administration official said Sunday. The new deal replaces NAFTA, a deal highly criticized by President Donald Trump.

The agreement will give U.S. dairy farmers greater access to the Canadian market, while Canada will effectively cap automobile exports to the U.S. Both nations, along with Mexico — which agreed to a deal with Washington in August — are expected to sign the agreement by the end of November. It would then be sent to Congress for a vote.

Both countries were at an impasse last week, with U.S. Trade Representative Robert Lighthizer saying the United States was ready to move forward with the Mexico deal and without Canada. Trump also criticized Canada for the slow pace of the trade discussions.

Mexico's currency, the peso, also jumped nearly 1 percent on Sunday night's news, before trading up 0.2 percent at 18.69 per U.S. dollar. Investors in U.S. stocks also cheered the deal, sending stocks higher.