Canadian Dollar Climbs Against US Counterpart amid Uncertainty Surrounding Trump Plans

The Canadian dollar edged higher against its US counterpart on Monday, as investors became uncertain about the future of Donald Trump’s economic agenda. A healthcare bill that aimed to dismantle and replace Obamacare failed to pass in Congress on Friday, which raised concerns that the economic plans of the president might face a great deal of resistance.

Investors had awaited details on Trump’s promised fiscal stimulus and corporate tax cuts for months, but the president’s administration instead chose to first aim at reforming the healthcare sector. However, the move was short-lived as Republicans in the House of Representatives failed to reach the minimum number of approving votes for the bill, which was uncovered a mere 3 weeks before the vote.

The withdrawal of the bill was a major blow for the Republican Party, and will likely have a negative effect on other items on Trump administration’s agenda. The corporate tax cuts that the president had promised during his election campaign were dependent in a large part on the federal funds that will be saved from ending Obamacare.

The weaker US dollar gave way to the Canadian dollar to rise today despite lower prices of crude oil, one of Canada’s main exports. Crude prices declined amid uncertainty surrounding a deal to limit global supply. Oil ministers of the member countries in the Organization of the Petroleum Exporting Countries met with other major producers to discuss whether to extend the deal another 6 months. The current agreement, which was reached last year, will end in June.

Investors will tune in for the speech of Bank of Canada Governor Stephan Poloz tomorrow, in which he may give hints of the direction that the central bank could follow in its next policy decision. The Bank of Canada said in January that interest rate cuts remain on the table, however recent data revealed that the economy is performing better than expected, which may change the bank’s stance.

USD/CAD traded at 1.3371 as of 19:45 GMT on Monday, from 1.3396 at 15:25 GMT, the pair’s highest level since March 22. USD/CAD started the week at 1.3359.

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