The Canadian dollar is higher against the US dollar on Wednesday. The loonie rose slightly 0.38 percent versus the greenback with the price of oil also rising more than 2 percent. The gold rally hit a speed bump with the yellow metal losing 0.41 percent as investors take profit on the current run and appetite for safe havens subsides.

The Canadian currency traded h higher as Treasury Secretary stoked trade optimism by saying the deal is 90 percent done. There is still little details on what that actually means, and last time the market heard similar claims it was before a falling out that lead to tariff escalation from the US and China. Even if there is no major deal announcement the worst case scenarios are benign with a new round of talks the most likely outcome of the meeting as a sidebar of both leaders attending the G20 in Japan.

The Fed walked back market expectations of a 50 basis points cut with major dove Fed president Bullard suggesting a 25 basis points reduction would be more appropriate. The fact remains that the Fed could cut in the short term and that is boosting the loonie versus the greenback as economic data in Canada validate the Bank of Canada (BoC) staying on the sidelines by holding the benchmark rate at 1.75 percent and not follow other major central banks down the easing path just now.

OIL – Crude Higher After Monster Drawdown

Despite a policy pivot earlier this year and an even clearer shift just last week, the Federal Reserve remains miles apart from what Wall Street wants.

Central bank officials have indicated that a rate cut is at least on the table, but the market is demanding more — so much more, in fact, that a conflict between the current designated path of monetary policy and the amount of support that investors feel is necessary seems on a collision course.

“We’re heading for a reckoning,” said Danielle DiMartino Booth, CEO of Quill Intelligence and advisor to then-Dallas Fed President Richard Fisher. “This is where policy errors begin to happen, when the Fed cannot acknowledge they’re actually damaging the economy.”

Fed Chairman Jerome Powell, through his statements since the June 18-19 Federal Open Market Committee meeting, and his fellow central bankers via the “dot plot” of their rate expectations, at least has nodded that one rate cut could be coming if conditions continue to weaken.

The dollar rose and European shares fell on Wednesday as traders scaled back expectations of an aggressive cut in U.S. interest rates in July, while Wall Street rose on hopes of a China-U.S. trade breakthrough at the G20 summit later this week in Japan.

Gold fell 1% after Federal Reserve Chairman Jerome Powell said on Tuesday the U.S. central bank is “insulated from short-term political pressures,” suggesting policymakers would not bow to pressure from President Donald Trump to sharply cut rates.

Trump said Powell was doing a “bad job” and he called on the central bank to lower rates so the United States can compete with countries that he said are devaluing their currencies.

Oil prices rose more than 2% on Wednesday and hit their highest in about a month, buoyed by U.S. government data that showed a larger-than-expected drawdown in crude stocks as exports hit a record high, and surprise drops in refined product stockpiles.

Brent crude futures gained $1.43, or 2.2%, to $66.48 a barrel by 1:21 p.m. EDT (1721 GMT). U.S. West Texas Intermediate (WTI) crude futures rose $1.57, or 2.7%, to $59.40 a barrel.

Crude inventories fell 12.8 million barrels last week, the Energy Information Administration said, far surpassing analyst expectations for a decrease of 2.5 million barrels. That was the most since September 2016, according to the statistical arm of the Department of Energy.

Net U.S. crude imports fell last week by 1.2 million barrels per day (bpd). Overall crude exports rose to 3.8 million bpd, beating its previous record of 3.6 million bpd in February.