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14.01.2020: USD flexing muscles (USDХ, USD/CAD)

Before the publication of the US inflation
data, the US dollar index asserted strength as markets anticipated strong figures. Most analysts foresee further weakness of
the Canadian dollar. News on the trade front is mainly ruling the
market. Today the Chinese delegation headed by Vice
Premier Liu He is arriving in Washington to sign the first phase trade deal on Wednesday. Traders welcome signs of a thaw in the US
– China trade relations. Two days before the deal is made, the White
House dropped China’s “currency manipulator” label. The yuan jumped in response, while the safe
haven yen is testing the lowest levels in eight months. Importantly, the stronger yuan is one of the
conditions set in the trade deal with the US. The question is still open how much Beijing
is ready to reinforce its national currency. The US dollar edged up against a basket of
its rival currencies. Its index opened the New York trade at near
97.47. The broad-based strength of the greenback
is propped up by both the weaker yen and the pound sterling. The British pound has been losing ground for
six sessions in a row amid the growing likelihood of monetary easing in the UK. At the same time, the euro is supported by
appetite for risk, though it is growing modestly versus the US dollar. Earlier, the euro/dollar pair responded better
to the news on the trade truce. As for the economic calendar, traders focus
on US inflation data. An annual rate of consumer inflation matches
the forecast. Consumer prices rose 2.3% in December on a
yearly basis from a 2.1% gain a month earlier. The Canadian dollar is following the downtrend
in line with expectations. Having tested the resistance level of 1.3064,
the USD/CAD pair is trading at near 1.3073. Analysts do not rule out a notable correctional
climb. A pullback below the level of 1.3064 will
signal a decline of the USD/CAD pair. Today the US will also present data of secondary
importance such as a monthly budget statement and a Redbook index. Besides, Federal Open Market Committee official
John Williams is due to speak today.

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