USD/CAD: Canadian Dollar Underpinned By Trade Optimism

After a strong start in the previous session, the dollar turned lower mid way through the US session. Whilst there was not clear-cut catalyst for the move lower, analysts are pointing to Trump’s impeachment trial and a lack of progress over a US — China phase one trade deal.

The latest from White House Economic Advisor Larry Kudlow is that the two sides are getting close to a deal. These remarks are propped up risk sentiment overnight although there is also some caution given the number of false signs of progress in US -Sino trade talks.

Today dollar investors will look towards the US economic calendar for the release of US retail sales. Analysts are expecting retail sales to have increased 0.2% month on month in October. This would be a significant improvement from last months’ -0.3% contraction. The dollar declined sharply after last months dismal figures, as concerns grew that the slowdown in the manufacturing sector was spilling over in the consumer sector. A solid retail sales reading could help put those fears to bed.

BoC Governor Stephen Poloz Speech In Focus

The Canadian dollar declined in early trade on Thursday amid growing concerns over the health of the global economy. Weak Chinese industrial production data and Germany narrowly missing a recession unnerved investor. As Canada is a major exporter of commodities, including oil; its economy can be hurt by a slowdown in global growth.

Today the Canadian dollar is advancing as oil gains on trade deal optimism.

Canadian dollar investors will now look ahead to a speech by Bank of Canada Governor Stephen Poloz at the Federal Reserve Bank of San Francisco. Investors will be listening carefully for hints over the direction of monetary policy. Just last month the Bank of Canada expressed concern over global trade uncertainty and cut its growth forecasts. Any dovishness from Stephen Poloz could weigh on demand for the Canadian dollar.

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