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US Dollar Canadian Dollar (USD/CAD) Exchange Rate Rises despite Plummeting US Housing Starts

February 26, 2019 - Written by John Cameron

USD/CAD Exchange Rate Rises despite Poor US Housing Data

The US Dollar Canadian Dollar (USD/CAD) exchange rate edged higher today and is currently trading around CA$1.3225.

USD gained on the Canadian Dollar despite the US housing starts change figures for December plummeting considerably below the consensus of -0.5% to -11.2%.

These were followed by disappointing housing starts figures for December which fell to 1.078 million, which weakened confidence in the US Dollar today.

However, many ‘Greenback’ traders are awaiting the Chair of the Federal Reserve, Jerome Powell, who is due to testify before Congress today. Any bullish comments could see USD gain further on the Canadian Dollar.

The Canadian Dollar, meanwhile, remains subdued today on a lack of data releases, and with gloomy expectations for tomorrow’s January consumer data, the ‘Loonie’ has fallen against the ‘Greenback’.

Royce Mendes, a Senior Economist at CIBC World Markets, commented:

‘By most indications it was a rough end to the year for Canada's economy.’

CAD is expected to remain dictated by geopolitical risk developments today.

USD/CAD Exchange Rate Rises as US-China Trade Talk Consensus ‘Very Close’

The US Dollar has had some of its gains clipped over the last few days following President Donald Trump’s announcement that he would delay tariffs on Chinese exports.

This has weakened the safe-haven demand for USD, with Trump further stating that a deal between the two superpowers was ‘very very close’ to completion.

Trump tweeted:

‘China Trade Deal (and more) in advanced stages. Relationship between our two Countries is very strong. I have therefore agreed to delay U.S. tariff hikes. Let’s see what happens?’

The ‘Greenback’ has further benefited from reports that China had committed to buying $1.2 trillion of US goods, however there has been no progress on issues regarding intellectual property.

Gregory Daco, a Chief US Economist at Oxford Economics, remained cautious, saying:

‘[W]e don't foresee a significant rollback of existing tariffs, and see underlying tensions regarding China's strategic ambitions, its industrial policy, technological transfers and 'verification and enforcement' mechanisms remaining in place.’

USD/CAD Forecast: US Dollar Could Rise Further on Positive Durable Goods Orders Figures

US Dollar traders will be awaiting tomorrow’s publication of the nondefense capital goods orders – excluding aircraft – figures for January.

These will be followed by US durable goods figures for January, and with any signs of an increase this could provide further uplift for the ‘Greenback’.

‘Loonie’ investors, meanwhile, will be awaiting the release of Canadian consumer data tomorrow, and with any improvement, we could see the CAD/USD exchange rate rise.

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