The Us dollar Canadian dollar exchange rate snapped a 3-day winning streak on Thursday. Despite broad strength in the US dollar, crude price gaining traction meant that the pair failed to break above 1.32. mark. The Loonie remained resilient versus the dollar with the pair closing lower at 1.3175. The dollar is advancing again in early trade on Friday.
The dollar was in favour across the board on the back of encouraging trade related headlines and as investors look ahead to US consumer sentiment data later today. Investors are growing increasingly confident that the US and China will sign a trade deal sooner rather than later. A Reuters report said that both President Trump and President Xi would be in London on 3 – 4th December for the NATO meeting, providing an opportunity to sign a phase one deal.
Today investors will continue watching trade headlines closely. Additionally, US consumer sentiment data will also be under the spotlight. Analysts are predicting that sentiment will hold steady in November at 95.5. A stronger reading could boost he greenback.
Oil Prices Lift “Loonie”
News that the US and China were edging closer to a trade deal boosted the price of oil on Thursday. A Chinese commerce ministry official said that the US and China agreed to gradually roll back the trade tariffs through each new phase of a trade agreement. This was then verified by the US. The news eased concerns of a global economic downturn which would negatively hit demand for oil. As a result, the price of oil jumped over 1.2% I the previous session.
Canadian dollars (versus US dollars) are directly correlated to the price of oil. When the price of oil increases, the value of the Canadian dollar (versus the US dollar increases). Therefore, the rally in the price of oil lifted the Canadian dollar.
Today investors will look towards Canadian labour market report. Analysts expect that 10,000 jobs were created in October, down from the impressive 54,000 last month. The unemployment rate is expected to remain steady at the record low of 5.5%. Investors will be watching closely to see whether the Canadian job market remains robust, particularly after the more dovish than expected BoC.