The Canadian Dollar’s fortunes in 2019 were dominated by the trans-Pacific trade war between the United States and China, a dispute in which Canada’s resource economy has a large interest but virtually no say.
Presidents Trump and Xi have agreed on a phase-one trade deal that alters the discussion from antagonism to accommodation and aims to foster a relationship between the two economic titans that will lead to a more comprehensive arrangement in the future.
China will increase purchases of US agricultural goods and make structural changes to intellectual property and technology issues and Washington will forgo a scheduled 15% tariff on $160 billion in Chinese consumer goods and reduce other duties in phases. The agreement is expected to be signed by the two leaders in February.
The US-China trade deal joins Brexit, secured by Boris Johnson’s victory in the general election, and the United States-Mexico-Canada Agreement (USMCA), which Congressional Democrats have agreed to pass after delaying for a year, as developments having the potential to free the US and Canadian economies from the concerns that have crimped growth for the past year.
How the two economies respond to the political and trade improvements, particularly will the business sector resume investment, will go a long way to determining the economic outlook for the year. There should be sure indications by the end of the first quarter.
The Federal Reserve and the Bank of Canada are awaiting the data promising to be patient and if necessary, to act as warranted.
USD/CAD LONG (Buy)
ENTER AT: 1.31530