The Canadian dollar snapped a two-day losing streak versus the US dollar on Wednesday. The US dollar Canadian dollar exchange rate trended southwards hitting a low of 1.3033. USD/CAD closed just above the low, down 0.15% at 1.3042.
The US dollar slipped lower across the board in the previous session as US and China finally signed the phase one trade deal. There had been some disappointment that the US would not remove tariffs on Chinese imports until after the US presidential elections in November, in order to check China’s compliance with its commitments. However, the mood improved when US Treasury Secretary Steve Mnuchin confirmed that China has created new significant laws to follow through on its phase one commitments.
Comments that phase two negotiations can begin immediately also boosted risk sentiment. The US stock markets the Dow Jones and the S&P 500 hit fresh record highs. Increased risk appetite weighed on demand for the safe haven dollar.
Today US investors will look back to the US economic calendar. The greenback could receive a lift following the release of US retail sales data. Analyst are expecting retail sales to have increased 0.3% month on month in December, up from 0.2% in November. Strong retail sales is an encouraging sign for the US economy which is principally consumer driven. Strong retail sales are also a good indication for higher future inflation. Therefore, a solid reading could boost the greenback.
Canadian Dollar Advances As USMCA To Clear US Senate
The Canadian dollar advanced despite crude oil edging lower. West Texas Intermediate ending Wednesday -0.2% lower at $58.11 per barrel. Crude oil declined even though the US – China trade deal should be good news for future oil demand and following better than expected inventory data.
Instead the Canadian dollar found support from news that the United States – Mexico – Canada Agreement, USMCA, trade deal is set to clear the USA Senate later today. This deal is set to replace the North American Free Trade Agreement.
Today investors will also be looking towards Canadian employment change numbers. Analysts are expecting another solid month, with 51,000 new jobs In December, after a solid increase of over 30,900 the previous month. Employment data is closely watched by the Bank of Canada. A strong reading could help strengthen the Loonie further.