The Canadian dollar has steadied on Monday, after surging in the Friday session. In North American trade, USD/CAD is trading at 1.2684, down 0.02% on the day. On the release front, there are no Canadian events on the schedule. The US will release Factory Orders, with an estimate of -0.3%. On Tuesday, Canada releases Trade Balance and the ISM Non-Manufacturing PMI.
After some stumbling on Friday, the US Senate passed a tax reform bill on the weekend. The vote was a squeaker, with 51 Republicans voting yes, against 48 Democrats and 1 Republican. The Senate vote is a big win for President Trump, who wants to sign a tax bill before Christmas. The Senate and House must now reconcile their two bills, and the new uniform bill will then have be passed in both houses. Investors are pleased with the bill, and the US dollar has responded to the vote with broad gains.
There was unexpected positive news on Friday, as Canadian employment change soared to 79.5 thousand, crushing the estimate of 10.2 thousand. This marked 12 straight months of job gains and helped drive the unemployment rate down to 5.9%. There was more good news, as the September GDP rebounded with a gain of 0.2%, edging above the estimate of 0.1%. The impressive numbers boosted the Canadian dollar by some 1.6% on Friday, its strongest 1-day gain in 2017. Will the Bank of Canada reconsider its monetary policy? A rate hike remains unlikely before April 2018, although red-hot numbers in the fourth quarter could mean that the BoC will adjust and raise rates more quickly.
