The US dollar continued to trade higher against the Canadian dollar for the fourth consecutive day as trade deal optimism showed signs of cooling and risk appetite decreased in the markets. Safe-havens, such as CHF and JPY, are outperforming in today’s session and the US dollar is pulled along, extending gains against most majors.
Trade deal hopes got another hit after President Trump said that the US will raise tariffs on Chinese goods in case a “phase one” agreement isn’t signed. These remarks were given in a speech to the Economic Club in New York yesterday evening. Nevertheless, Trump also added that “we’re close – significant phase one deal could happen, could happen soon.”
The Federal Reserve Chairman, Jerome Powell, said that a sustained expansion is likely ahead for the United States and that a strong labour market will boost consumer spending. These comments have also been quite beneficial for the US dollar as it eased concerns over a looming slowdown.
Finally, the US CPI numbers came in better than expected, showing a monthly increase in consumer prices of 0.4% in October while market expectations were set at 0.3%. In any case, this is a substantial rise compared with the previous month’s flat inflation of 0.0%.
The risk-off market environment, wider short-term spreads, and softer oil prices have put some selling pressure on the Canadian dollar, which is overall mildly under-performing against other major currencies.
Technical levels show that buyers attempt to push the price above the 61.8% Fib level, but the long upper wick on the daily candle signals that sellers are still not giving up.