USD/CAD approaches 1.3500 ahead of US PCE Price Index/Canadian GDP
- USD/CAD attracts some buyers on Friday in the wake of a modest USD strength.
- Bearish Oil prices undermine the Loonie and further lend support to the major.
- The US PCE Price Index and monthly Canadian GDP print eyed for some impetus.
The USD/CAD pair regains positive traction during the Asian session on Friday and looks to build on this week's recovery move from the 1.3420 area, or its lowest level since March 8. Spot prices, however, remain below the 1.3500 mark as traders keenly await Friday's key macro data from the US and Canada before placing aggressive directional bets.
The monthly Canadian GDP report is due for release later today, though the market focus will remain glued to the US Personal Consumption Expenditure (PCE) Price Index. The crucial US inflation data will play a key role in influencing market expectations about the Federal Reserve's (Fed) rate-cut path, which, in turn, will drive the US Dollar (USD) demand and provide some meaningful impetus to the USD/CAD pair.
In the meantime, a modest USD uptick, along with this week's sharp decline in Crude Oil prices, which tends to undermine the commodity-linked Loonie, offers some support to spot prices. That said, bets for another oversized interest rate cut by the Fed in November keep the USD confined in a familiar range held over the past two weeks or so and within the striking distance of the year-to-date (YTD) low touched last week.
Apart from this, the prevalent risk-on environment, bolstered by additional monetary stimulus measures from the People's Bank of China (PBOC), should contribute to capping the safe-haven Greenback. Hence, it will be prudent to wait for strong follow-through buying before confirming that the USD/CAD pair has already bottomed out in the near term and positioning for any further appreciating move.
Economic Indicator
Gross Domestic Product (MoM)
The Gross Domestic Product (GDP), released by Statistics Canada on a monthly and quarterly basis, is a measure of the total value of all goods and services produced in Canada during a given period. The GDP is considered as the main measure of Canadian economic activity. The MoM reading compares economic activity in the reference month to the previous month. Generally, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.
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Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
