During the Asian trading session on Friday, the USD/CAD pair maintained its position around 1.3540, hinting at a potential halt to its four-day downward trend. However, with trading volumes expected to be subdued due to Good Friday observances, market activity remains muted.
The resilience of the US Dollar (USD) can be attributed to a prevailing hawkish sentiment surrounding the Federal Reserve’s commitment to sustaining higher interest rates. This shift in sentiment follows recent robust economic indicators from the United States (US), coupled with cautious remarks from Federal Reserve Governor Christopher Waller, signaling a lack of urgency for rate cuts in 2024.
Notably, US Gross Domestic Product (GDP) Annualized surged by 3.4% in Q4, surpassing market expectations and indicating robust economic growth. Meanwhile, US Core Personal Consumption Expenditures (QoQ) for the same period slightly missed forecasts, coming in at 2.0%.
On the other hand, the Canadian Dollar (CAD) found support from the prospect of increased foreign currency inflows, driven by rising West Texas Intermediate (WTI) oil prices. Expectations of sustained production cuts by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) contributed to the uptick in crude oil prices.
Canada’s economic resilience was underscored by the expansion of Gross Domestic Product (MoM) by 0.6% in January, surpassing expectations and reflecting a robust economic landscape. These positive economic indicators have bolstered confidence in Canada’s economic outlook, mitigating expectations of immediate rate cuts by the Bank of Canada (BoC).
