- The US Dollar is rebounding from Friday’s selloff as investors gear up for holiday.
- The Loonie briefly rallied to a fresh 19-week high as rate-hungry markets pummel the USD.
- USD/CAD set for a fifth weekly decline in six straight weeks.
The USD/CAD pared back above 1.3260 after plunging to a fresh 19-week low on Friday as markets continue to price in an accelerated pace of rate cuts from the Federal Reserve (Fed) in 2024 as US inflation continues to ease faster than initially expected.
Canadian GDP stalls out, US inflation continues to recede
The Canadian Dollar is struggling to find reasons to catch bids as economic data from Canada continues to point towards an economic slowdown. Canadian monthly Gross Domestic Product (GDP) failed to print growth for a fourth straight reporting period in October, coming in flat at 0.0% after September’s GDP print saw a downside revision from a meager 0.1% to flat. Canadian GDP has failed to move the needle month-over-month since June’s 0.2% decline.
Read More: Canada GDP stalls in October vs. 0.2% expansion expected
The US Personal Consumption Expenditures (PCE) Price Index eased back from market forecasts as inflation continues to drain away faster than economic models predicted, ramping up money market bets of faster and more frequent rate hikes from the Fed in 2024. The Core US PCE Price Index for the year through November printed at 3.2% versus the market forecast of 3.3%, slipping back from October’s print of 3.4% (revised down from 3.5%).
Read More: US PCE inflation softens to 2.6% from a year ago vs. 2.8% expected
With US inflation steadily declining, investors’ bets on Fed rate cuts next year have ramped up significantly with market expectations running well ahead of the Fed’s own rate outlook; money markets are pricing in upwards of 160 basis points in rate cuts through 2024, compared to the Fed’s own dot plot of rate forecasts, which sees only 75 basis points by the end of next December.
USD/CAD Technical Outlook
The USD/CAD’s late-Friday rally has the pair pulling back into neutral territory on the day, clawing back towards the 1.3300 handle as market volatility takes a step higher heading into the week’s close.
The pair is still down on the week, down eight-tenths of one percent from Monday’s opening bids and in the red by 2.5% from the last swing high into 1.3620.
Intraday action still has a lot of ground to cover before the pair can start challenging topside momentum beyond the 200-hour Simple Moving Average (SMA) near 1.3400, and near-term recoveries will be difficult to time with technical indicators pinned into oversold territory.
USD/CAD Hourly Chart
USD/CAD Daily Chart
USD/CAD Technical Levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
GBP/USD dips to 1.2445 with BOE's monetary decision
GBP/USD fell towards 1.2440 as the Bank of England left monetary policy unchanged, pointing to delayed yet potentially steeper rate cuts. The pair bounced from the level but remains depressed below 1.2500.
EUR/USD extends weekly decline, approaches 1.0700
EUR/USD grinds lower and nears 1.0700 in European trading hours. The US Dollar takes modest advantage of a mixed sentiment and the absence of relevant macroeconomic news. An uptick in government bond yields provides additional support to the Greenback.
Gold stable just above $2,300 ahead of a fresh catalyst
Gold price remains little changed for a fourth consecutive day on Thursday, trading just above the $2,300 mark. The soft performance of global equities keeps the bright metal afloat as investors hope for directional clues.
Solana meme coins TREMP, BODEN rise after Donald Trump’s pro-crypto stance
Solana-based meme coins TREMP and BODEN post nearly 125% and 7% gains on Thursday. Former US President Donald Trump says his campaign will likely accept crypto donations.
Bank of England inches one step closer to a summer rate cut
The Bank of England is undoubtedly turning more optimistic, but it’s keeping its options open amid some uncertainty surrounding the near-term inflation numbers. We still narrowly expect the first rate cut in August.