The Canadian dollar has posted gains on Wednesday, with the North American markets yet to open. Currently, USD/CAD is trading at 1.2868, down 0.31% on the day.
Trump threatens veto of stimulus package
The financial markets can be forgiven for assuming that the US stimulus bill was a done deal after both houses of Congress overwhelmingly voted to approve the massive package, worth USD892 billion. Enter President Trump, who has threatened not to sign the bill, saying that the stimulus checks to individual Americans are far too small. The specter of a presidential veto of the bill is compounded by the fact that the bill approved by Congress also provides funding for the federal government. If the bill is not passed into law, this would result in a partial government shutdown next week. Congress can override a veto if two-thirds of the lawmakers in each house approve of the bill, but Republicans will be clearly hesitant to use such a measure against their own president. Is Trump bluffing about resorting to a veto? Perhaps, but at the very least it is keeping the financial markets busy in the usually quiet period just before Christmas.
Later on Wednesday, Canada releases GDP, which is released on a monthly basis (13:30, GMT). After hitting an impressive 6.5% growth rate in June, GDP has been falling, which points to a recovery that is rapidly losing steam. GDP slowed to 0.8% in September and the trend is projected to continue in October, with a forecast of just 0.3 per cent. Any figure weaker than this could sour sentiment towards the Canadian dollar and send the currency lower.
- USD/CAD faces resistance at 1.2936. The next resistance line is at 1.3101
- There is support at 1.2831, followed by a support line at 1.2714
- USD/CAD crossed above the 20-day MA line on Tuesday. This is a sign of an upswing for the pair