The Canadian dollar is weakening against most major currency competitors to close out the trading week. Despite retail sales coming in stronger than expected and inflation matching market expectations, the loonie’s decline could still be driven by the central bank leaving interest rates unchanged. Is the market signaling that a rate cut is needed to resuscitate economic growth?
The Canadian dollar today rallied against its US counterpart in the first half of today’s session driving the USD/CAD to its daily lows boosted by in-line inflation figures. However, the currency pair quickly reversed course after the Bank of Canada announced its rate decision, which was interpreted as being very dovish.
The US dollar slumped midweek as the US and China officially signed the first phase of a comprehensive trade agreement. This comes as December inflation was subdued and business optimism fell short of analysts’ expectations. Still, the greenback is trading relatively higher against a basket of currencies this month.
The Canadian dollar did not show a clear trend today, being under the influence of mixed fundamentals. Domestic employment data was surprisingly good but the drop of crude oil prices was weighing on the currency.
The US dollar is mixed against its currency rivals at the end of the trading week, buoyed by a tepid jobs report that fell short of the market forecasts. The December labor report suggested that job creation may be tapering off in a robust economy.
The Canadian dollar was among the weakest currencies today, dragged down by negative domestic housing data. Both housing starts and building permits fell unexpectedly. The falling prices for crude oil, Canada’s biggest export, were weighing on the currency as well.
The Canadian dollar is weakening against multiple currency rivals midweek as energy prices are hitting the loonie. President Donald Trump confirmed that Iran is “standing down” in the intense Middle East conflict, sending futures plunging. The loonie was also impacted by disappointing export data. Despite being one of the top-performing G20 currencies, the Canadian dollar has had a rough start to 2020.
The Canadian dollar fared rather well today, rising against other most-traded currencies or at least staying flat against them. The notable exceptions were the US dollar and the Japanese yen. Losses versus the strong greenback were especially big. But overall, the loonie showed a rather decent performance considering negative macroeconomic data and falling prices for crude oil.
The US dollar is gaining momentum on Tuesday as new data revealed that the trade deficit fell to its lowest level in more than three years in November. With the US and Iran conflict potentially peaking, investors are gradually returning to equities and the greenback, which is evident in the slump in crude oil prices. A better-than-expected reading in the purchasing managers’ indexes (PMIs) also enhanced the buck’s strength.
The US dollar is tumbling to kick off the trading week, despite strong data that should support the greenback. The buck might be continuing its fourth-quarter reversal that saw the currency pare most of its stellar gains from the first nine months of 2019. Investors could be cautious due to swelling US-Iran tensions, which have also somewhat seeped into global financial markets.
