Canadian Dollar Holds Strong Against Greenback Amid US GDP Surge
The Canadian Dollar (CAD) faced a turbulent day on Thursday as investors reacted to the unexpected surge in US Gross Domestic Product (GDP) figures for the second quarter. The odds of a September rate cut from the Federal Reserve (Fed) have slightly decreased, causing the rate trader bets to fall from 100% to 85% overnight.
Canada is awaiting key economic data releases next week, including the GDP print for May and the S&P July Purchasing Managers Index (PMI) print. These mid-tier data prints are unlikely to drive significant market momentum, especially with the Fed’s rate call scheduled for next Wednesday.
Daily Market Recap: CAD Holds Ground as Greenback Reacts to GDP Shock
- US Annualized GDP surged to 2.8% in Q2, surpassing the forecasted 2.0% and previous 1.4%.
- The GDP Price Index decreased to 2.3% from the previous 3.1%, falling below the expected 2.6%.
- US Durable Goods Orders saw a sharp decline in June, with a -6.6% MoM compared to the forecasted 0.3%.
- Rate traders have slightly reduced the odds of a Fed rate cut in September to 85% from 100%.
- Up next is the US Personal Consumption Expenditures Price Index (PCE) inflation data on Friday.
Technical Analysis: CAD Holds Steady Against Greenback
The Canadian Dollar (CAD) remains relatively stable against the Greenback, with USD/CAD hovering around the 1.3800 handle. The pair briefly rallied to an eight-month high before facing resistance at 1.3850. Greenback buyers are now challenged to prevent a potential backslide to the 200-day Exponential Moving Average (EMA) at 1.3600.
Key Factors Driving the Canadian Dollar
The Canadian Dollar (CAD) is influenced by various factors, including interest rates set by the Bank of Canada, Oil prices, economic health, inflation, trade balance, market sentiment, and the US economy. Factors such as interest rate levels, Oil prices, and economic data releases play a significant role in determining the value of the CAD.