USD/CAD has posted small gains on Tuesday, continuing the upward trend which marked the Monday session. Currently, the pair is trading at the 1.34 level. On the release front, it’s another quiet day. In the US, today’s highlight is CB Consumer Confidence, which is expected to dip to 113.9 points. The sole event in Canada is a speech from BoC Governor Stephen Poloz in Oshawa.
Donald Trump is used to getting his way in the private sector and on reality TV, but he had to swallow a bitter pill last week as he suffered his first major setback as president. His bill to replace the Affordable Care Act was pulled before it even went to a vote on the House floor, despite the Republicans enjoying a majority in Congress. This bruising defeat has sent the US dollar sharply lower, and sent market jitters higher. Trump’s administration has stumbled out of the starting gate, and after more than two months in office, he has yet to provide any details over even an outline of economic policy. The inquiry into the Trump administration’s links with Russia is gathering steam, and is another cause for concern for nervous investors. Trump has said he will now focus on tax reform, but he has his work cut out, trying to convince a skeptical Congress and general public that he can deliver the goods and pass new, effective legislation.
Weaker oil prices could weigh on the soft Canadian dollar. West Texas crude has dropped 1.0% in March, and dipped to $47.05 last week, its lowest level since the end of November. Crude headed lower after Crude Oil Inventories posted a strong surplus of 5.0 million barrels, crushing the estimate of 1.9 million. The weekly indicator has recorded only two declines in 2017, as US oil drillers continue to enter the market and ratchet up US oil production. This, together with increased US shale production, has more than offset OPEC’s production cuts. Last week, OPEC announced it was considering extending the production cut agreement by another 6 months, until the end of 2017, but it’s doubtful that such a move will prop up oil prices.
