The US dollar Canadian dollar exchange rate attempted a recovery in the European session on Tuesday. The pair advanced to a high of 1.3250 before easing lower in the US session. The pair closed flat on the day. The US dollar is cautiously higher versus its Canadian counterpart on Wednesday.
It’s been a quiet week so far this week but that is about to change from today. The dollar has moved within a familiar range in the absence of relevant data and as investors look for clues as to whether the Trump administration will hike tariffs on Chinese imports on 15th December. Beijing has said that they don’t believe that the US will go through with the hikes. However, the Chinese have also said that the threat of tariffs needs to be removed in order for trade talks to progress.
Today trade could take a back seat as investors look ahead to, firstly US inflation figures, followed by the Fed rate decision.
The dollar could get a boost from US inflation numbers. Analysts are expecting consumer prices to increase in November to 2%, up from 1.8%. Core inflation is expected to hold steady at 2.3%. Both these figures are at or above the Federal Reserve ‘s target number of 2%. A strong reading combined with last week’s solid jobs data will support the Fed’s assessment that the US economy is holding up well.
The Fed will give the policy announcement later today. They are not expected to cut interest rates after three cuts across this year. Investors will focus on the pursuant press conference and dot plot, the plan for future interest rates.
Canadian Dollar Looks To Oil For Direction
The Canadian dollar strengthened in the latter part of the previous session as the price of oil recovered from weakness earlier in the week. Crude oil pushed back over $59 boosted by optimism that the US will avoid hiking tariffs later this week and amid easing concerns over the health of the eurozone area following stronger than forecast ZEW sentiment data.
The Energy Information Administration raised its 2020 oil demand outlook by 50,000 barrels per day, which also underpinned the price of oil. As the price of oil increased the commodity sensitive Canadian dollar picked up.
There is no high impacting Canadian dollar due today. The Canadian dollar will follow moves in the price of oil and move at the will of its US counterpart.