The US dollar surged against the Canadian dollar in today’s trade ahead of the Bank of Canada rate decision on Wednesday. The Canadian dollar traded at 1.3294 against the greenback as of 3:05 p.m. in London.
In a move that came days after the US signed a law that backed Hong Kong autonomy, China responded with counter-measures that avoid trade. The Chinese Foreign Ministry said that the country would sanction right organizations and suspend US Navy ships to visit Hong Kong.
The Ministry’s spokeswoman Hua Chunying told reporters today that “China urges the U.S. side to correct its mistakes and stop any words and deeds that interfere in Hong Kong affairs and China’s internal politics.”
The move came just two weeks before the December 15 deadline when the US is poised to impose an additional 15% tariff on $156 billion of Chinese imports. Markets expect that those tariffs could be avoided if a phase-one deal gets signed.
Among economic reports, the US manufacturing sector experienced its fourth consecutive monthly contraction in November. The ISM manufacturing PMI came in at 48.1, while market expectations were set at 49.2. The New Orders Index registered 47.2 percent – a 1.9% fall from the October reading of 49.1.
In Canada, the BoC holds its latest monetary policy meeting for 2019 on Wednesday. It’s largely expected that the central bank will hold rates steady at 1.75%.
Technical levels show that the US dollar has been consolidating its November gains, trading in a well-defined range between mid 1.32s and lower 1.33s for the last two weeks. Any significant move above the November 20 high of 1.3327 looks limited for now.
The Bank of Canada monetary policy meeting could provide a much-needed catalyst to push the pair outside its two-week trading range.