The Canadian dollar has jumped to a 2-week high in the Monday session. Currently, USD/CAD is trading at 1.3175, down 0.88% on the day. On the release front, the key U.S. indicator is ISM Manufacturing PMI, which is expected to edge lower to 57.5 points. Canada will also release Manufacturing PMI. On Tuesday, Canada publishes Labor Productivity, which is forecast to dip to 0.4%.
Investor risk appetite has jumped on Monday, and that has translated into strong gains for minor currencies like the Canadian dollar. On Monday, the currency improved to its highest level since November 20. The catalyst for the boost was the meeting between President Trump and Chinese President Xi Jinping on the sidelines of the G-20 summit. Just last week, Trump had threatened to raise tariffs on $200 billion in Chinese products from 10 percent to 25 percent on January 1. However, the tone was optimistic after the meeting, with China receiving a short reprieve. The sides have agreed to continue talks for another 90 days, and the U.S. tariffs will take effect if no agreement is reached. The markets were clearly relieved that the tariff war has de-escalated, and European markets have jumped on Monday, following the lead of Asian markets. At the same time, the U.S. and China remain far apart on resolving the trade war, and the greenback will likely reverse directions unless the parties make substantial progress in the trade dispute, which has shaken the markets and threatens to derail global growth.
