USD/CAD consolidates below 1.2100 ahead of US PCE data, budget proposal
|- USD/CAD gains momentum in the early European sessions
- Firm US Treasury yields lift demand for the US dollar.
- Rising commodity prices support loonie.
The buying opportunities in the US dollar pushed USD/CAD higher on Friday. The pair opened lower, albeit recovered swiftly to the session’s high at 1.2089 while comprising a 30-pip movement.
At the time of writing, the USD/CAD pair is trading at 1.2088, up 0.2% for the day.
The US Dollar Index (DXY), which indicates the performance of the greenback against six majors, rose from 4-month lows and stood at 90.04 with 0.14% gains. The US 10-year benchmark rose to 1.61% with 0.4% gains for the day.
The upbeat labor market data with weekly Initial Jobless Claims falling to 406K, well below the market expectation of 426K, lifted market sentiment.
Meanwhile, US President Joe Biden proposes a $6 trillion US budget for the 2022 fiscal year. However, US Treasury Secretary Jenet Yellen urged a more expansive fiscal policy and not to burden the next generation with taxes.
On the other hand, the Canadian dollar is supported by steady crude oil prices. On the economic data front, Manufacturing Sales retreated by 1.1% in April.
For now, traders are gearing up for a slew of economic data releases: US Personal Income/Spending Data, Goods Trade Balance, Personal Consumption Expenditure, Chicago PMI and Michigan Consumer Expectations.
If PCE data align with the Fed's ambitious inflation target of 2%, then it might prompt policymakers to tweak their accommodative policy sooner than expected.
USD/CAD Additional Levels
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