HomeContributorsFundamental AnalysisCanadian Dollar Rally Continues as US-China Talks Renew Optimism

Canadian Dollar Rally Continues as US-China Talks Renew Optimism

The Canadian dollar started the week with strong gains, as the rally continues. In the Tuesday session, the pair is trading at 1.3293, down 0.04% on the day. It’s a quiet day on the release front – Canada will post trade balance and the U.S publishes JOLTS Job Openings. USD/CAD has now posted losses for four straight days, losing 2.4% in that period.

The U.S. dollar was broadly lower on Monday, as fallout from Fed Chair Powell’s recent remarks continues to weigh on the greenback. Powell engaged in some damage control, seeking to reassure the financial markets that was listening to market concerns about continuing to tighten policy. The markets had given Powell a thumbs-down after the Fed’s December rate statement was on the hawkish side, and stocks plummeted. Powell was dovish in his remarks, saying that he was aware of the risks of a slowdown in the U.S. economy and that the Fed would be patient in its policy decisions.

Risk appetite is higher, as investors are pinning hopes on the outcome of this week’s meeting between U.S and Chinese officials. The teams are holding two days of talks, in an effort to reduce global trade tensions. The ongoing trade war has rocked equity markets, which had their worst year in 2018 since the 2008 financial crisis. The world’s two largest economies have engaged in tit-for-tat tariffs, and President Trump has threatened to impose additional tariffs on March 1 if the sides don’t reach a deal. If this set of talks points to progress, traders can expect risk appetite to improve, which would be bullish for the Canadian dollar.

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