The US dollar continued its bull run against the Canadian dollar for the third straight day as markets extended a relief rally, hoping that tensions between the US and Iran won’t escalate further. Safe-havens such as gold and the Japanese yen declined and oil traded lower as well, failing to provide support for the Canadian dollar.
China’s announcement that Vice Premier Liu He will travel to Washington has also been beneficial for the greenback as this is the first official confirmation of the signing of the phase-one trade deal by Beijing. Trump also said he would travel to China to begin talks on the second-phase trade deal afterward.
Market reports coming from Canada have mostly missed market forecasts today. New housing starts came in at 197K in December while forecasts were set at a 212K rise. Similarly, the total value of building permits fell by 2.4% in November, missing expectations of a 1% rise.
Later today, Bank of Canada Governor Poloz will deliver a speech at the Greater Vancouver Board of Trade’s Economic Outlook Forum where he’s expected to answer audience questions. This could lead to fresh volatility in the loonie.
From the US, unemployment claims fell by 9K in the week ending January 4 compared to the previous week, taking the total figure for seasonally adjusted initial claims to 214K. Market forecasts were set at 221K. Markets are now awaiting the headline NFP numbers scheduled for release tomorrow at 1:30 p.m. London time.
Charts show that the lower channel line at 1.2960 provided significant support for the USD/CAD pair which traded at 1.3065, as of 2:10 p.m. London time. A decisive break above the October 28 low of 1.3050 – a mid-term resistance level – could see the pair retest 1.3150 in the coming period.
