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The US dollar Canadian dollar exchange rate experienced some volatility across the previous week. The US dollar finished the week 0.6% higher versus its Canadian counterpart, ending just shy of 1.3300. The pair is edging lower in early trade on Monday.
The US dollar was in demand across last week, not just versus the Canadian dollar but against most of its peers, thanks to less dovish FOMC minutes, encouraging US data and amid mixed messages over the US — China trade dispute.
On Friday, both manufacturing and service sector pmi’s beat analysts’ expectations bolstering the outlook for the US economy. The manufacturing pmi increased to 52.2 in November, up from 51.3 in October. The service sector pmi increased to 51.6 in November, up from 50.6 in the previous month. The data helped ease investor concerns over the health of the US economy and supported the Federal Reserve’s stance that the US economy is in recovery mode.
This week investors will look towards US consumer confidence figures on Tuesday ahead of Black Friday. These events should help investors gauge the health of the US consumer.
Trade headlines will remain in focus as investors continue assessing the chance of a phase one trade deal being achieved. Over the weekend China said it will raise penalties for theft of Intellectual Property, a move that is seen as a gesture towards the US, boosting risk appetite weighing on demand for the dollar. President Trump signing into law the bill which supports the human rights of Honk Kong’s pro-democracy protesters could add further complications to progress in trade talks in the near term.
Loonie Advances As Oil Rallies
Whilst the Canadian dollar had rallied on Thursday last week, following a less dovish tone from Bank of Canada President Stephen Poloz. However, the Loonie was unable to hold onto those gains on Friday following the release of disappointing Canadian retail sales figures. Data showed that headline Canadian retail sales recorded a 0.1% decline for the third consecutive month in September.
The price of oil, one of Canada’s largest exports, eased from a two-month high on Friday. Concerns over a US — China trade deal being achieved overshadowed market expectations of OPEC extending production cuts. West Texas Intermediate is pushing higher in early trade on Monday offering some support to the Loonie.
The CN Rail strike is also lingering in the background for Canadian dollar investors. Any prolonged strike could have a negative impact on the economy. The strike at Canadian National Railway Co entered its fourth day on Friday, with few signs of an agreement being reached.
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