USD/CAD falls toward 1.3700 as US Dollar offers gains ahead of economic data

USD/CAD halts its winning streak ahead of Canadian Retail Sales and US Consumer Sentiment due on Friday.
The US Dollar edges lower due to a downward correction in US Treasury yields.
Lower WTI price puts pressure on the commodity-link Canadian Dollar.

Akhtar Faruqui FXStreet

USD/CAD halts its four-day winning streak, trading around 1.3720 during the European session on Friday. However, the US Dollar (USD) advanced against the Canadian Dollar (CAD) during the earlier hours of the Asian market due to the emergence of the risk aversion sentiment. This could be attributed to the higher-than-expected Purchasing Managers Index (PMI) data released on Thursday from the United States (US). The data reinforced the hawkish sentiment surrounding the Federal Reserve (Fed) of maintaining higher policy rates for an extended period.

The S&P Global US Composite PMI rose to 54.4 in May from April's 51.3, marking the highest level since April 2022. The index exceeded market expectations of 51.1. The Service PMI surged to 54.8, indicating the biggest output growth in a year, while the Manufacturing PMI increased to 50.9.

Additionally, the latest Federal Open Market Committee (FOMC) Minutes suggested that Fed policymakers expressed concerns about the lack of progress on inflation, which was more persistent than expected at the start of 2024. Federal Reserve Bank of Atlanta President Raphael Bostic stated on Thursday that the inflation outlook might not improve as quickly as market participants are hoping for.

On the CAD front, declining crude Oil prices are exerting selling pressure on the commodity-linked Canadian Dollar (CAD), as Canada is the largest oil exporter to the United States. West Texas Intermediate (WTI) Oil prices have been falling for the fifth consecutive session, trading around $77.80 per barrel at the time of writing.

Higher-than-expected US PMI data and hawkish comments from Federal Reserve officials suggest a delay in the Fed’s rate cuts. Higher interest rates can negatively impact economic activities in the United States, the world's largest oil consumer, potentially reducing Oil demand.

Additionally, the expectation that the Bank of Canada (BoC) might cut interest rates before the US Federal Reserve could weigh on the Canadian Dollar, supporting the USD/CAD pair.

Investors expect Retail Sales data from Canada on Friday. On the US front, US Durable Goods Orders and the Michigan Consumer Sentiment Index will offer insight into economic conditions in the United States.

USD/CAD

Overview
Today last price	1.3723
Today Daily Change	-0.0007
Today Daily Change %	-0.05
Today daily open	1.373

Trends
Daily SMA20	1.3676
Daily SMA50	1.3647
Daily SMA100	1.3563
Daily SMA200	1.3572

Levels
Previous Daily High	1.3744
Previous Daily Low	1.3657
Previous Weekly High	1.3691
Previous Weekly Low	1.359
Previous Monthly High	1.3846
Previous Monthly Low	1.3478
Daily Fibonacci 38.2%	1.371
Daily Fibonacci 61.8%	1.369
Daily Pivot Point S1	1.3676
Daily Pivot Point S2	1.3623
Daily Pivot Point S3	1.359
Daily Pivot Point R1	1.3763
Daily Pivot Point R2	1.3797
Daily Pivot Point R3	1.385

Author

Akhtar Faruqui

FXStreet

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

GBP/USD loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

EUR/USD trims gains, challenges 1.1400

EUR/USD now gives away part of its earlier advance, receding toward the 1.1400 contention zone on Thursday. Meanwhile, the pair’s recovery comes amid extra losses in the US Dollar, at the time when while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold remains bid and close to $4,100

Gold accelerates its recovery and approaches the key $4,000 mark per troy ounce at the end of the week, adding to Thursday’s advance. However, expectations for a hawkish Fed remain steady and keep the yellow metal’s potential upside contained.

Crypto Today: Bitcoin at $60,000, Ethereum at $1,500, and XRP at $1 face a make-or-break test

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

Week ahead – NFP report to challenge Dollar strength and the hawkish Fed

Dollar strength dominates markets, as the hawkish Fed overshadows geopolitics and lower oil prices. NFP week could drive September Fed hike expectations and boost market volatility. The euro lacks fresh bullish catalysts, all eyes on the preliminary inflation report and the ECB Forum.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.