The dollar pushed higher versus the Canadian dollar on Monday, extending gains from the previous week. However, gains were capped by rising oil prices. The US dollar Canadian dollar exchange rate advanced 0.1%, closing close to the key support of 1.3150. The pair is trading flat in early trade on Tuesday.
Weak US macro-economic data weighed on demand for the dollar in early trade yesterday. Data showed that US factory orders declined -0.6% month on month in September; the biggest decline in four months. The figures confirmed the ongoing weakness in the US manufacturing sector amid the US – China trade dispute.
Whilst the numbers were disappointing, they come at a time when the US – China trade war could be thawing. US Commerce Secretary Wilbur Ross said over the weekend that he was quite optimistic that the last few obstacles before the first phase trade deal could be signed would soon be overcome.
The US dollar found demand in the US trading after, after trade deal optimism sent the US stock market to a record high, boosting demand for t he American currency at the same time.
Today investors will look towards US ISM non-manufacturing data which could lift the dollar. Analysts are expecting activity in the sector to have picked up. This would ease fears that he US manufacturing slump in spilling into the consumer sector.
Oil Jump Keeps Canadian Dollar Buoyant
Strength in the Canadian dollar kept limits on the US dollar rally. The Canadian dollar remained buoyant in the previous session thanks to higher oil prices.
The Iranian oil minister Bijan Zanganeh told reporters on Monday that he believed that the Organisation of Petroleum Exporting Countries (OPEC) would agree to further reduce oil production when they meet in December. This prospect of tighter supply boosted the price of oil, as did the encouraging trade dispute headlines. West Texas Intermediate rallied to a 6-week high of $57.43.
The price of oil impacts the value of the Canadian dollar because when oil prices are high, the amount of US dollars Canada earns on each barrel of oil it exports will be high.
There is no high impact Canadian data for investors to focus on today, meaning US data and US – Sino trade headlines are most likely to drive the pair.
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