USD/CAD: Dollar Pushes Higher As Trump Angers China

The US dollar Canadian dollar exchange rate dipped to a low of 1.3260 at the start of the US session on Wednesday. The pair picked up off the low, staging a rebound amid strong US macro data and a weakening oil price which dragged on the commodity sensitive Canadian dollar. The pair closed the session 0.1% higher on the day at 1.3289. The dollar is advancing in early trade on Thursday.

The US dollar shot higher versus its peers on Wednesday after data eased fears over the health of the US economy. Data showed that the US economy expanded by more than initially thought in the third quarter. The second estimate of the US GDP in Q3 printed at 2.1%. This is above the 1.9% recorded in the first estimate and above the 2% annualised growth of the second quarter.

Adding to the upbeat mood, US durable goods also came in above analysts’ expectations. US durable goods orders increased 0.6% month on month in October, significantly above the -0.8% decline expected. The only soft spot in the slew of data came from personal consumption expenditure inflation figure (PCE) which increased at 1.6% year on year below the 1.7% analysts had pencilled in.

The data may help alleviate concerns about the state of the US economy. The data supports the Fed’s theory that the US economy is still on an expansionary path meaning a rate cut is unlikely despite softening inflation.

Today is a public holiday in the US for Thanksgiving. Trading volumes are expected be low. However, President Trump quietly signing the Hong Kong bill into law, potentially straining US — Chinese relations, could boost the dollar in risk off trading.

Canadian Dollar Slips On Sliding Oil Price

The Canadian dollar was unable to hold onto early gains on Wednesday following an unexpected increase in crude oil inventories. The US Energy Information Administration’s weekly data revealed that crude oi stocks in the US increased by 1.6 million barrels in the week ending November 22^nd. Following the released the price of West Texas Intermediate dropped, dragging with it the Canadian dollar.

Today sees the release of a few low impact data points including the Canadian current account balance and CFIB Business barometer ahead of Friday’s GDP reading.

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