USD/CAD retreats towards 1.3600 as Oil pares recent losses, focus on the key US/Canada statistics

• USD/CAD pares the biggest daily gains in over a week, sidelined of late.
• Upbeat US data renewed hawkish Fed concerns and favored US Dollar buyers.
• Oil prices failed to cheer price-positive sentiment amid firmer USD.
• Canada GDP, Fed’s preferred inflation gauge and US Durable Goods Orders are eyed for fresh impulse.

USD/CAD seesaws around mid-1.3600s as the Loonie pair consolidates the previous day’s heavy gains during early Friday’s sluggish trading. In addition to the generally inactive session, a bounce in the WTI crude oil also allows the quote to pare recent gains, due to Canada’s heavy reliance on energy exports as a source of income.

WTI crude oil rose to the highest levels since December 05 on early Thursday before reversing from $79.85. The pullback moves, however, failed to last below $77.00 from where the energy buyers returned to the desk. That said, the black gold picks up bids to $78.20 by the press time. Geopolitical fears from Russia joined China’s Covid-linked headlines to suggest more demand and fewer supplies to previously favor the oil prices. However, the upbeat US data renewed hawkish Fed bets and weighed on the quote afterward.

The firmer prints of the US growth and consumption data allowed the US Dollar to reverse the early losses and end the day on a positive side. Also likely to have favored the USD could be the US Senate’s passage of a $1.7 trillion government funding bill and the latest comments from US President Joe Biden showing readiness to tame inflation.

Previously, risk-on mood and downbeat Treasury yields weighed on the US Dollar. The same could be linked to the sentiment-positive headlines from China and mixed US data, as well as the Bank of Japan’s (BOJ) another unscheduled bond operation.

Talking about the data, the US economy expanded at an annualized rate of 3.2% in the third quarter (Q3), per the final readings of the Gross Domestic Product (GDP), versus 2.9% previous estimates. Further, the Personal Consumption Expenditure (PCE) Prices match 4.3% QoQ estimations during Q3 2022 whereas the Core PCE improved to 4.7% QoQ versus 4.6% market forecasts.

Against this backdrop, S&P 500 Futures remain depressed while the Wall Street benchmarks closed in the negative. Further, the US Treasury bond yields recovered.

Moving on, US Core Personal Consumption Expenditure (PCE) - Price Index, the Federal Reserve’s preferred inflation gauge, will join the monthly Durable Goods Orders to offer the one last shot of market activity before witnessing the holiday-linked inaction. Forecasts suggest that the US Core PCE Price Index remains unchanged at 0.2% MoM. However, the Annualized forecasts suggest softer figures of 4.7% YoY versus 5.0% previous readings. Further, US Durable Goods Orders could register a contraction of 0.6% in November compared to the previous increase of 1.1% (revised from 1.0%). Additionally, Canada’s monthly GDP for September, expected to remain unchanged with 0.1% growth, will also be important for the USD/CAD pair traders to watch for clear directions.

Technical analysis

Although the 21-DMA restricts the immediate downside of the USD/CAD pair to around 1.3580, the bull’s return remains doubtful unless the quote crosses the 1.3700 key hurdle.