Further, the USD/CAD currency pair remains well supported above the 1.3800 level. This is partly due to a strong US Dollar as markets become increasingly optimistic about an acceleration of trade talks between the U.S. and China. This progress comes at a crucial moment, as economic mood is turning decidedly negative. Consequently, the currency pair rises a little bit.
Before you read on, picture this USD/CAD traded a bit higher during North American trading hours on Tuesday, rising just above 1.3855. To be fair, investors have every right to be optimistic. This increase is an indication of how they are anticipating a cooling down of the trade war fever that has affected global markets for the past few years. The USD – CNY currency war The trade relationship and economic interplay between China and the United States is an important aspect of world trade dynamics.
The US Dollar Index (DXY) surged to over 99.10. This increase underscores the dollar’s power against almost all major currencies. This increase in the DXY indicates that investors are moving to the US dollar in light of these shifting geopolitical trends. Sentiment in the markets is much more positive. This surge is driven entirely by optimism that recent meetings between high-ranking US and Chinese officials will bring about the lowering of tariffs and other trade barriers.
As the USD/CAD continues to benefit from the greenback’s broad rally, market participants continue to keep a close watch on the ongoing evolution of the US-China relationship. This potential for de-escalation creates an opportunity for new trade flows and economic prosperity to take root. This radical new status quo would cause a USD appreciation against nearly all other currencies including the CAD.