- The US Dollar bounces up from one-month lows against the CAD and reaches session highs at 1.3950.
- The Greenback is showing a mild positive tone as investors ponder the scope of the Sino-US trade deal.
- A hawkish Fed Powell offset the impact of the “hawkish cut” delivered by the BoC earlier on Wednesday.
The US Dollar is regaining lost ground against the Loonie, amid broader Greenback strength as markets ponder the scope of the Sino-US trade deal. The pair bounced from one-month lows near 1.3880 on Wednesday and is extending gains to test Wednesday’s high, at 1.3954, which, so far, keeps holding bulls.
US President Donald Trump and his Chinese counterpart, Xi Jinping, have reached a deal to lower tariffs on Chinese products, while China will keep rare-earth trade flowing, resume purchases of US soybeans, and tackle the illegal trade of fentanyl.
Details of the agreement have been scarce, but Trump has deemed the meeting “amazing”, and the Chinese Premier Xi affirmed that they reached a consensus on “important economic and trade issues” to solve their problems, according to a report by the state-owned Xinhua news agency.
The US Dollar jumped from lows on Wednesday following the Federal Reserve’s monetary policy decision. The bank cut rates by 25 basis points, as widely expected, but Chairman Jerome Powell rattled markets, warning that a December rate cut is far from guaranteed, and sent the US Dollar higher against its main peers.
Somewhat earlier, the Canadian Dollar got a boost from a “hawkish rate cut” by the Bank of Canada (BoC). The central bank met expectations and lowered its benchmark interest rate by 25 basis points to 2.25%, but Governor Tiff Macklem struck an unexpectedly hawkish tone at the ensuing press conference, suggesting that the BoC might have reached the end of the easing cycle.
