USD/CAD Pair Analysis: A Closer Look at Market Dynamics
Key Points:
- USD/CAD attracting buyers with modest USD strength
- Bearish Oil prices undermining the Loonie
- Market focus on US PCE Price Index and Canadian GDP report
As the Asian session progresses on Friday, the USD/CAD pair is showing signs of positive traction, aiming to extend its recovery from the 1.3420 support level, the lowest since March 8. While the pair remains below the 1.3500 mark, traders are awaiting key macro data releases from the US and Canada for further direction.
Today, the monthly Canadian GDP report is scheduled for release, but the spotlight is on the US Personal Consumption Expenditure (PCE) Price Index. This crucial inflation data will play a significant role in shaping market expectations regarding the Federal Reserve’s rate-cut strategy. Consequently, the USD’s demand will impact the USD/CAD pair’s movement.
Amidst a modest USD uptick and a notable decline in Crude Oil prices, which typically weakens the commodity-linked Loonie, spot prices are receiving some support. However, speculation surrounding another sizable rate cut by the Fed in November is keeping the USD range-bound, albeit close to the year-to-date low reached recently.
Furthermore, the prevailing risk-on sentiment, boosted by additional monetary stimulus from the People’s Bank of China, is likely to limit the appeal of the safe-haven US Dollar. Therefore, it is advisable to observe further buying momentum before confirming a potential bottom for the USD/CAD pair in the short term.
Economic Indicator: Gross Domestic Product (MoM)
The Gross Domestic Product (GDP), released by Statistics Canada on a monthly and quarterly basis, measures the total value of all goods and services produced in Canada within a specific period. As a key gauge of Canadian economic activity, the MoM reading compares current economic performance to the previous month. A higher reading is typically viewed as bullish for the Canadian Dollar (CAD), while a lower reading signals bearish sentiment.
Next release: Fri Sep 27, 2024 12:30
Frequency: Monthly
Consensus: 0.1%
Previous: 0%
Source: Statistics Canada
Stay informed about key economic indicators like GDP to better understand market trends and potential currency movements.