USD/CAD: US Dollar Recovers Ground at 61.8% Fib as Markets Scrutinize Phase-One Deal

The Canadian dollar gave back some gains against the US dollar in today’s trade as markets are scrutinizing the impact of the Phase One trade deal announced last week.

Both sides are still light on facts and no one outside the negotiating teams knows the content of the deal.

After an initial optimism in the markets that sent most stock indices up and increased risk appetite, investors could be starting to consider the deal only as a prelude to new trade tensions down the road. The US said the agreement will likely be signed in early January, while China said that those details “are still under negotiation.”

Some analysts said that the Phase One deal is only a transactional deal that won’t have a substantial impact on the world economy and global growth forecasts. Among the narrow set of issues agreed upon, Beijing would increase US agricultural imports in exchange for removing the threat of a US tariff increase on December 15.

According to the latest CoT report released on Friday, investors have reduced their aggregate long position in the US dollar in the week through Tuesday by $1.5 billion, which marks the first reduction in six weeks. This took the total net long position in the USD to $18.1 billion.

The bullish bias in the Canadian dollar remained mostly unchanged with a slight $47 million reduction in long positions, taking the net long sentiment to $1.57 billion.

Regarding economic reports, Canadian manufacturing sales slowed down by 0.7% in October, while markets forecast the value in sales to hold steady. In the US, the number of building permits issued in November increased to 1.48 million, up from 1.46 million in October.

The USD/CAD pair formed a strong pinbar candle on Monday in an attempt to trigger an H&S pattern, which ended up being a fake breakout.

The pair seems well supported above the lower 1.31s, which aligns with the 61.8% Fib level of the November upturn. As of 2:20 p.m. London time, the US dollar traded at 1.3166 against the Canadian dollar. is a news site only and not a currency trading platform. is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on do not represent our views.