USD/CAD Advances as Trump Announces Signing Ceremony

USD/CAD edges up on Tuesday, after remaining flat at the close of Monday session. Currently, the pair is trading at 1.3155, up 0.09% as of 3:24 PM UTC. The price hit the daily high at 1.3169.

Judging by larger timeframes, the pair is still fluctuating within a bullish channel that formed on December 18.

The Loonie has lost some ground after Statistics Canada said that the Canadian economy had surprisingly decreased by 0.1% in October, while economists anticipated a rise of 0.1%. This is the first drop in the gross domestic product (GDP) since February.

The GDP reading is the latest piece of disappointing data that might put pressure on Canada’s central bank to seriously consider a rate. So far, the Bank of Canada (BoC) hasn’t cut its interest rate since October last year.

The BoC decided to postpone potentially easing measures even though its counterparts, including the US Fed, have already cut the rates and implemented stimulus measures. The BoC will announce the next fixed rate on January 22.

All in all, the unexpected decline in the economy might be temporary. Paul Ashworth, head of Capital Economics’ North America division, said:

“Although the Canadian economy is going through a soft patch in the fourth quarter, some of it is due to temporary disruptions that should be reversed early next year.”

Statistics Canada said that goods-producing industries fell 0.5% in November, while service sectors were unchanged. The manufacturing sector declined by 1.4%, the fourth drop in five months. Durable manufacturing contracted by 2.3%.

The pair has become a bit more volatile after the US President Donald Trump said earlier today that he and Chinese counterpart Xi Jinping would have a signing ceremony to ink the phase one trade deal between the two countries. He told reporters:

“We will be having a signing ceremony, yes. We will ultimately, yes, when we get together. And we’ll be having a quicker signing because we want to get it done. The deal is done, it’s just being translated right now.”

Previously, US Trade Representative Robert Lighthizer revealed that representatives from both countries would sign the interim deal in the first week of January.

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