23.12.2019: CAD hurt by downbeat GDP data (USDХ, USD/CAD)

23.12.2019: CAD hurt by downbeat GDP data (USDХ, USD/CAD)


Having responded to earlier news, the market
is ready to evaluate new macroeconomic data from the US and Canada. The US dollar index is climbing slowly from
local lows. Meanwhile, the Canadian dollar is losing ground
versus its American counterpart in light of unexpectedly weak GDP data. Investors are fretted in the currency markets
despite the statement from Donald Trump that the US and China would very shortly sign the
first phase trade deal. Moreover, Beijing announced its intention
to trim tariffs on some US imports from January 1. While the euro and the pound sterling are
giving in to the US dollar, demand for the safe haven yen is increasing. At the same time, the yuan pulled back to
the level of 7 points, extending the downtrend today. In the recent weeks, the US dollar has been
advancing across the board. Its buoyant demand comes from strong macroeconomic
reports. Today traders were still pricing in the upbeat
US GDP as the economic growth inched up in the third quarter. In the New York trade, they are absorbing
durable goods orders and new home sales. These metrics have been unaffected by recession
fears, so market participants were not ready for negative readings. Before the publication, the US dollar index
settled up at 97.15, heading upwards. Traders speculating on the Canadian dollar
were focused on Canada’s preliminary GDP for October. The actual data was much worse than expected. The national economy expanded 1.2% in annual
terms, weaker than the forecast for a 1.4% gain. GDP edged down 0.1% on a quarterly basis,
while the consensus suggested a flat reading. Canada’s economy contracted for the first
time in the latest eight months. The USD/CAD pair is still making a correctional
decline, trading at near 1.3165. On the whole, the currency pair has been trapped
in a wide trading range. To sum up, the US and China encouraged market
participants with positive statements on the trade relations ahead of Christmas. Amid lower liquidity on Forex, traders are
in the wait-and-see mood. Financial assets are highly sensitive to both
positive and negative news on the trade front that will be the main driving force until
the year end.

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