The Canadian dollar has posted losses in the Tuesday session, erasing the gains from Monday. Currently, USD/CAD is trading at 1.2763, up 0.43% on the day. On the release front, there are no Canadian indicators on the schedule. Bank of Canada Governor Stephen Poloz will speak at event in Montreal. In the US, today’s highlight JOLTS Job Openings, which is expected to soften to 5.98 million. As well, Fed Chair Janet Yellen will deliver remarks at an event in Washington.
Will Donald Trump succeed in overhauling the tax code for the first time in 30 years? Trump suffered a humiliating defeat with his failed health care proposal, and the President has now set his sights on tax reform. Trump wants Congress to pass legislation overhauling the tax code before the end of the year, but that will be a tall order, as most Democrats have come out against the proposal, and not all Republicans are on board. The bill would cut corporate taxes from 35% to 20%, but predictably, Democrat and Republican lawmakers are at odds as to whether the bill will lower taxes for the middle class. Expectations that Trump will cut taxes has been the catalyst for a stock market rally over the past year, and if the bill does become law, the US dollar will likely gain ground.
The Bank of Canada has said that it has no plans to raise interest rates, but it may have to reconsider if Canadian employment numbers continue to impress. In October, the economy produced 35.3 thousand jobs, well above the estimate of 15.3 thousand. This marked the highest gain since June. South of the border, job numbers were a disappointment. After a decline in September, a result of the hurricanes which battered the US, nonfarm payrolls rebounded sharply with a reading of 261 thousand. This was a respectable number, but still fell short of the forecast of 312 thousand. Wage growth also disappointed, slowing to 0.0%, short of the estimate of 0.2%. This marked the first time in 2017 that wage growth did not increase, underlining persistent weak inflation. Although Fed Chair Yellen and other Fed policymakers have expressed confidence that inflation levels will rise, this is still yet to occur, despite strong growth and a labor market at capacity.
