Canadian dollar gains as Trump travel curb pressures greenback

Mon Jan 30, 2017 4:35pm EST
 
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By Fergal Smith

TORONTO (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Monday, recovering from an earlier nearly one-week low, as uncertainty triggered by a travel curb ordered by U.S. President Donald Trump pressured the greenback.

Gains for the Canadian dollar came even as prices of oil, one of Canada's major exports, fell. U.S. crude oil futures CLc1 settled 54 cents lower at $52.63 a barrel after another increase in U.S. drilling activity spread concern over rising output. [O/R]

"It is an unusual risk aversion trade to see the Canadian dollar strengthening in a day when oil and stocks are down and that speaks to the fresh uncertainty in the United States," said Adam Button, currency analyst at ForexLive.

"The market is seeing signs that (U.S.) policy making will be haphazard and quickly rolled out and poorly thought out."

The U.S. dollar fell more than 1 percent against the Japanese yen JPY= following a weekend of negative headlines relating to Trump's executive orders on immigration.

The market braced for Canada's gross domestic product data for November and a speech by Bank of Canada Governor Stephen Poloz on Tuesday.

Earlier this month, Poloz said a rate cut remained "on the table" if the risks facing the country are realized, warning there would be "material consequences" if Trump enacts protectionist policies.

There is a risk that the central bank governor comes across as more optimistic due to the strength of recent domestic data and the expected tailwind of fiscal stimulus, Button said.   Continued...

 
A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch