USD/CAD soft on trade-deal prospects, testing 1.31 the figure

• USD/CAD on track for a test below 1.31 the figure on firm commodity complex.
• Phase-one trade deal between the US and China is in the making, supporting commodity currencies. 

USD/CAD is flat at the time of writing, stuck in a tight holiday range of between 1.3105 and 1.3120. Funds is under pressure as the commodity complex catches a bid on the so-called 'phase-one' trade deal that is scheduled to be signed in January between the US and China. The positive traction should remain supportive of the world trade sentiment and oil prices which are correlated to the CAD. 

"The Canadian economy is well situated to profit from a surge of growth in China, the US and around the world," Joseph Trevisani, Senior Analyst at FXStreet explained.

Whether that growth takes place is a function of the US-China trade agreement and the tenor of the continuing relationship. Even after this accord many of the tariffs imposed over the last two years will remain in place. The trade, ownership and technology practices of Chinese companies for the past two decades will not vanish overnight, nor will optimism of US and Canadian executives return with two signatures.   

If China and the United States maintain a cordial relationship in the months after the agreement is signed and talks continue toward a second deal, the global economy may prosper. There should be definite indications by the end of the first quarter, –USD/CAD Price Forecast 2020: Canada and loonie are well positioned but not in control

US/Sino trade deal in the making

The Chinese Foreign Ministry spokesman, Geng Shuang, said on Wednesday that officials from Beijing and Washington were in “close communication about detailed arrangements for the deal’s signing and other follow-up work.”

On Xmas Eve, President Trump said that the “deal is done, it’s just being translated right now,” adding that China’s leader, Xi Jinping, would hold a signing ceremony for the partial trade resolution in January.

“We’ll be having a quicker signing because we want to get it done.

USD/CAD levels