After Declining to 1.31 for the first time in six weeks on Wednesday, the US dollar Canadian dollar recovered to close the session flat at 1.3122. The pair is advancing in early trade on Friday.
Despite oil prices continuing to push higher on Wednesday, the Canadian dollar was unable to capitalize on the higher prices. West Texas Intermediate renewed multi-month high of $61.40 in the previous session. Usually strong oil price boosts the commodity sensitive Canadian dollar, instead weak data overshadowed the rally in oil.
Wholesale sales in Canada declined -1.1% in October, significantly worse than the -0.1% decline that analysts had predicted. Wholesale sales declined on weaker sales of machinery, equipment and agricultural supplies. This disappointing figure also overshadowed a strong rebound in the Canadian labour market, which had been broadly expected.
Today investors will look towards Canadian retail sales data; data which could help guide the Bank of Canada’s interest rate outlook. So far, the central bank has held off from cutting rates whilst other central banks across the globe have eased monetary policy. However, there has been growing speculation that the bank could adopt a more dovish path in the coming year.
Dollar Shrugs Off Impeachment
The dollar traded broadly flat in the previous session in quiet holiday trade. Investors weighed up Trump’s impeachment trial and comments by US Treasury Secretary Steve Mnuchin that a trade deal should be signed in January.
The dollar was little moved by the impeachment of President Trump in the House of Representatives. Trump was impeached on charges of abuse of power and obstruction of Congress; however, he is likely to be acquitted in the Republican controlled Senate.
Today investors will look towards US third quarter GDP data, which is expected to have grown 2.1% in line with the previous reading.
The dollar has been boosted across the week by strong US economic data which has decreased investors’ expectations that the Federal Reserve will continue cutting interest rates in 2020. A strong GDP reading could boost the dollar.
