The Canadian dollar is trading lower even as the price of oil is close to 1 percent higher on Wednesday.Safe havens such as gold, the Japanese yen and the Swiss franc trade higher against the US dollar after the crisis engulfing the Trump administration. The loonie could not capitalize on USD weakness as the newly appointed US Trade representative set the groundwork for the NAFTA renegotiation. Robert Lighthizer, briefed a Senate Finance Committee on the trade agreement overhaul. The renegotiation talks are expected in late August with representatives of Canada and Mexico. The Trump administration needs to present a letter before congress 90 days before starting trade talks. Senator Ron Wyden mentioned that the US is seeking a currency manipulation clause to be used in future trade agreements the United States enters into.
A Reuters survey that took in the opinions of economists was caught off guard as much as the rest of the market when back in February there were no reasons to be concerned about a NAFTA renegotiation. The same panel of economists is now warning that the trade talks could have material impact on Canada as it exports three quarters of its exports south of the border.
Canadian manufacturing sales rose 1 percent in March but the February data was revised downward to a 0.6 contraction. Canadian retail sales will be released on Friday, May 19 at 8:30 am alongside inflation data.
The USD/CAD gained 0.416 percent in the last 24 hours. The currency pair is trading at 1.3632 near daily highs after the turmoil surrounding the White House has triggered a wave of risk aversion that has pulled investors away from the Canadian dollar in search of safe havens.
The rise of oil prices could not offset the pressure on the Canadian dollar as the White House regardless the current drama with Trump’s disclosure of classified information in the aftermath of the dismissal of FBI Director James Comey.
Crude is 0.952 percent higher on Wednesday. The price of West Texas Intermediate is trading at $49.08 after US crude inventories confirmed the forecast of 1.8 million barrels drawdown last week. The softness in the US dollar following the political turmoil in Washington has also helped WTI climb towards the $50 price level.
US inventories recorded their sixth straight drawdown a day after Organization of the Petroleum Exporting Countries (OPEC) members were voicing their support for the extension to their production cut agreement. Russia and Saudi Arabia issued a joint statement on Monday almost guaranteeing an extension to be announced on the scheduled meeting May 25.
Gold has gained 1.656 percent in the last 24 hours. The price of the yellow metal is trading at $1,259.21 continuing to climb higher as the political situation in the United States has given way to a rise in risk aversion by investors. The difficulties facing the Trump administration raise serious doubts about the pro-growth policies that were promised last year being enacted this year. Tax reform and infrastructure spending were behind the USD rally earlier as Trump took office, but as immigration, trade and health battles took their toll in the President’s political capital. The US economic data has also been mixed of late adding more uncertainty into the next meeting of the U.S. Federal Reserve in June. The CME FedWatch tool has reduced the probability of a rate hit to 64.6 percent after reaching 87.7 percent a week ago.
Market events to watch this week:
Thursday, May 18
4:30 am GBP Retail Sales m/m
8:30 am USD Unemployment Claims
Friday, May 19
8:30 am CAD CPI m/m
8:30 am CAD Core Retail Sales m/m
*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar 
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