- USD/CAD comes under some renewed selling pressure on Friday amid a modest USD downtick.
- A recovery in global risk sentiment is seen weighing the safe-haven buck and exerting pressure.
- Hawkish Fed expectations should limit the USD fall and lend support ahead of the US PCE data.
The USD/CAD pair struggles to capitalize on the previous day's goodish rebound from a one-week low and meets with a fresh supply on Friday. The pair remains depressed heading into the European session and is currently placed near the lower end of its daily range, around the 1.3630-1.3625 region.
A modest recovery in the US equity futures prompts some selling around the safe-haven US Dollar, which, in turn, is seen as a key factor weighing on the USD/CAD pair. The USD downtick, however, is likely to remain limited amid reviving bets for a more aggressive policy tightening by the Fed, bolstered by the upbeat US macro data released on Thursday.
In fact, the US GDP growth for the third quarter was revised higher to show that the economy expanded by 3.2%, faster than the 2.9% estimated previously. Adding to this, the number of Americans filing new claims for unemployment-related benefits increased less than expected during the week ended December 17, pointing to a still-tight labour market.
The resilient US economy could allow the Fed to continue raising borrowing costs, which, in turn, continues to act as a tailwind for the US Treasury bond yields and favours the USD bulls. Meanwhile, subdued action around crude oil prices fails to provide any impetus to the commodity-linked Loonie and could further lend support to the USD/CAD pair.
Traders, however, might refrain from placing aggressive bets and prefer to wait on the sidelines ahead of Friday's release of the US Personal Consumption Expenditure (PCE) data. The Core PCE Price Index - the Fed's preferred inflation gauge - will be looked upon for fresh cues on inflation and influence the US central bank's decision on future rate hikes.
This, in turn, will play a key role in driving the USD demand in the near term and provide some meaningful impetus to the USD/CAD pair on the last day of the week. Apart from this, oil price dynamics should further contribute to producing short-term trading opportunities around the major.
Technical levels to watch
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
EUR/USD drops to near 1.0850, further support at nine-day EMA
EUR/USD continues to lose ground, trading around 1.0860 during the Asian hours on Friday. From a technical perspective on a daily chart analysis indicates a sideways trend for the pair as it continues to lie within the symmetrical triangle.
GBP/USD posts modest gains above 1.2650, focus on the Fedspeak
The GBP/USD pair posts modest gains near 1.2670 during the Asian session on Friday. Meanwhile, the USD Index recovers some lost ground after retracing to multi-week lows near 104.00 in the previous session.
Gold price gains ground, with Fed speakers in focus
The Gold price trades with a positive bias on Friday. The bullish move of precious metals in the previous sessions was bolstered by the softer-than-expected US inflation data in April, which triggered hope for rate cuts from the US Fed.
XRP steadies at $0.51 as Ripple plans to expand XRP Ledger, custody services in Africa
Ripple hovers close to $0.51 on Friday, above the psychologically important $0.50 level, as traders await the court ruling of the lawsuit against the US SEC and amid new commitments from the firm to expand its services in Africa.
Disputes and De-risking: US-China trade dispute changes trade flows
The bilateral trade dispute between the US and China is entering a new round and is leading to renewed discussions about the deglobalisation of global trade in goods.