The Canadian dollar is taking advantage of the lack of data and news on Tuesday, rallying mostly on higher energy prices. After several consecutive reports of mixed numbers, the loonie is enjoying a breather and making gains against some of its currency rivals.
In recent days, it was revealed that manufacturing sales fell 1.3% in December, new housing prices were flat, hourly wage growth was up 1.8% in January, and the Canadian economy added 66,800 net new jobs last month. Traders will now look ahead to wholesale and retail sales, inflation, and trade data in the coming days.
All of this is unlikely to encourage the Bank of Canada (BOC) to raise interest rates at its next policy meeting in March. The central bank has confirmed that it will make moves based on economic data, but the market is not expecting a rate hike until at least June.
Meanwhile, the loonie is benefiting from rising oil prices as March West Texas Intermediate (WTI) crude futures tacked on $0.42, or 0.76%, to $56.01 a barrel on the New York Mercantile Exchange. Year-to-date, crude prices are up more than 21%.
Crude remains one of Canadaâs biggest exports, and a global economic slowdown could affect demand levels. This is partially the reason why Canadian traders are paying close attention to US-China trade talks because the worldâs second-largest economy is one of the biggest consumers of oil, and the trade spat has negatively impacted growth, leading to worries about demand in the future.
Investors are optimistic that both sides can come to a new trade agreement. Though the March 1 deadline is nearing, President Donald Trump has confirmed that he is willing to extend the deadline in order to avoid raising tariffs to 25% on $200 billion worth of Chinese goods.
The USD/CAD currency pair tumbled 0.26% to 1.3207, from an opening of 1.3242, at 19:21 GMT on Tuesday. The EUR/CAD was flat at 1.4980.
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