The USD/CAD pair is regaining positive traction during the Asian session on Friday, seeking to build on this week’s recovery from the 1.3420 level, which marks its lowest point since March 8. However, spot prices remain below the 1.3500 threshold as traders await critical macroeconomic data from both the US and Canada before making significant directional bets.
The monthly Canadian GDP report is set for release later today, but market attention is primarily focused on the US Personal Consumption Expenditure (PCE) Price Index. This key inflation data is expected to influence market expectations regarding the Federal Reserve’s (Fed) rate-cut trajectory, which will, in turn, impact demand for the US Dollar (USD) and provide significant momentum for the USD/CAD pair.
In the interim, a modest uptick in the USD, coupled with a sharp decline in crude oil prices this week, which typically undermines the commodity-linked Canadian Dollar (Loonie), offers support to spot prices. Nonetheless, speculation about another substantial interest rate cut by the Fed in November keeps the USD confined within a familiar range established over the past two weeks, close to the year-to-date (YTD) low reached last week.
Additionally, the prevailing risk-on sentiment, bolstered by new monetary stimulus measures from the People’s Bank of China (PBOC), is likely to limit gains for the safe-haven USD. As a result, it may be prudent for traders to await strong follow-through buying before confirming that the USD/CAD pair has found its bottom in the near term and positioning for any further appreciation.
Related Topics:
