USD/CAD: US Dollar To Test $1.30 Post US Airstrikes?

The US dollar strengthened versus its Canadian counterpart on Thursday. The US dollar Canadian dollar exchange rate closed the fist session o the year 0.05% higher at 1.2984. The pair briefly traded above the 1.30 mark but was unable to hold the key level. The dollar has jumped higher in early trade on Friday.

The US dollar rose on Thursday after being under pressure across recent weeks. Strong indications that the US and China will sign a first phase trade deal by mid-January has helped improve the outlook for the global economy, weighing on demand or the safe haven greenback in December.

However, concerns over a second phase deal are starting to surface. Market participants are starting to question the likelihood of a second phase trade deal being achieve. The uncertainty is boosting demand for the buck, as is increased geopolitical risk after US airstrikes in Baghdad.

Today investors will turn their attention to the US economic calendar. ISM manufacturing data in addition to minutes from the December Federal Reserve monetary policy meeting are expected to drive movement in the US dollar. Investors will scrutinise the minutes closely for clues as to the direction the Fed intend to take monetary policy after pausing the rate cutting cycle indefinitely.

WTI Jumps, Loonie to follow?

The Canadian dollar was under pressure on Thursday following weak manufacturing PMI data and as crude oil prices continued to pare recent gains. The Canadian manufacturing pmi dropped to 50.4 in December as the sector expanded at its slowest pace in four months. New orders declined and business optimism weakened according to the Markit PMI data on Thursday. This was a disappointing end to the year. The weak data dragged on the Canadian dollar.

Also weighing on the price of the Loonie on Thursday were declining oil prices. Oil prices slipped on Thursday however have since surged overnight following the US attacks. West Texas Intermediate dropped by 1% on Thursday before rebounding over 2.5%. The rally in oil could boost the commodity sensitive Canadian dollar.

There is no high impacting Canadian data for investors to digest today. Instead crude oil price movement and oil inventories will be closely watched. A decline in inventories could boost the price of oil and help support the price of the Canadian dollar.

Currencylive.com is a news site only and not a currency trading platform.

Currencylive.com 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 currencylive.com do not represent our views.