USD/CAD is in free fall on New Year’s Eve. Currently, the pair is trading at 1.2957, down 0.87% as of 3:40 PM UTC. The price has just crashed to the lowest level since October 2018.
Recently, US President Donald Trump said that he would sign the phase one trade deal with China on January 15 at the White House. The US dollar has weakened as investors have shifted their focus to riskier assets, including the Loonie.
Besides this, the USD is under pressure as the US consumer confidence index unexpectedly declined in December. The Conference Board (CB) said that the indicator came in at 126.5, down from 126.8 in November. Economists surveyed by Reuters anticipated an increase to 128.2 for December.
Lynn Franco, CB’s director of Economic Indicators, explained:
“While consumers’ assessment of current conditions improved, their expectations declined, driven primarily by a softening in their short-term outlook regarding jobs and financial prospects. While the economy hasn’t shown signs of further weakening, there is little to suggest that growth, and in particular consumer spending, will gain momentum in early 2020.”
The proportion of US consumers thinking that business conditions are “good” maintained almost unchanged at 38.7%, while those judging that conditions were “bad” fell to 11.1% from 13.6%.
The sentiment on labor market conditions was mixed. The percent of those claiming jobs were “plentiful” and those saying they were “hard to get” rose to 47% and 13.1%, respectively.
When it comes to business conditions in general, consumers maintained a positive stance.
The Loonie is supported by increasing oil prices, with both Brent and WTI crude brands trading close to three-month highs. The oil prices aim higher amid US-China trade optimism, production cuts from OPEC and its allies, and tensions in the Middle East. On Sunday, the US launched several airstrikes in Iraq and Syria, causing an Iraqi oil field to suspend temporarily.
Giovanni Staunovo, oil analyst at UBS, commented:
“Considering that Iraq is the second largest OPEC producer with production around 4.6 million barrels per day, market participants may add a risk premium to oil tension if tensions last for longer.”
