12.12.2019: USD has no excuse for growth (USDХ, USD/CAD)


In light of the Fed’s policy decision, traders
rushed to quit long deals on the US dollar. Today the US currency is making efforts to
recover from the lowest level in four months, but it is still extending weakness. The Canadian dollar is taking advantage of
the situation, but it cannot assert strength. The Fed’s policy meeting did not arouse
fireworks among investors, so the market avoided a volatility surge. The US dollar responded with a brief drop. The US regulator left interest rates unchanged
as expected and indicated that deeper rate cuts were not appropriate next year. Despite the solid economic conditions, the
Fed voiced concerns about soft inflation. Investors are discouraged that Jerome Powell
presented a cautious economic outlook projecting slowing growth in 2020 and 2021. That pushed the greenback down. In the New York session, its index is trading
at 97.16, unable to climb over 97.50. Now traders are shifting focus towards the
US – China trade talks. Today Donald Trump is going to meet top negotiators
and discuss the looming tariff deadline. Market participants are worried that his decision
to enforce tariffs will entail collapse in financial markets and escalate trade tensions
between Washington and Beijing. Nevertheless, investors hope that the parties
will settle the first phase trade deal that will delay the imposition of tariffs. This is the best-case scenario for traders
speculating on the yuan. However, failed expectations may bring bitter
disappointment. Today traders took notice of factory inflation
data from the US. The PPI did not match expectations as the
annual rate of producer price growth remained at 1.1% in November, while the consensus suggested
a 1.2% gain. Besides, the US Department of Labor reported
that the number of unemployment claims hit a two-year high. Meanwhile, the Canadian dollar escaped from
a narrow trading range amid weakness of its American rival. Today the USD/CAD pair settled down at 1.3161
and later rebounded slightly. Bank of Canada Governor Stephen Poloz is due
to speak on late Thursday. Resistance at 1.3195 is expected to subdue
attempts to grow. In case the price is rejected from this level,
it will head downward for 1.3131.

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