USD/CAD remains steady near 1.3900 with US GDP data on focus

The US Dollar retreated from highs above 1.3900 against the CAD, but remains steady above 1.3885.
Investors have remained cautious on Thursday, awaiting US GDP data and more Fed speeches.
The highlight of the week is Friday's PCE Prices index release, the Fed's favorite inflation gauge.

Guillermo Alcala FXStreet

The US Dollar has been trading within a narrow range near the 1.3900 level on Thursday, with downside attempts held at 1.3885. The cautious market mood amid ongoing gei¡opolitical risks and a not-so-dovish rhetoric by Fed speakers is keeping US Dollar bears at bay for now.

The focus now is on the final reading of the US second quarter’s Gross Domestic Product, which is expected to confirm that a rebound to a 3.3% annualised growth after the 0.5% contraction seen in the first three months of the year.

Later on, another batch of Fed speakers might provide further clues about the central bank’s monetary policy plans. The highlight of the week, however, will be Friday’s Personal Consumption Expenditures (PCE) Price Index, which will be analyzed with interest for more evidence of the inflationary impact of Trump’s tariffs.

On Wednesday, San Francisco Fed President Mary Daly confirmed that the bank will have to ease its monetary policy further, but she warned that the next rate cut might take some time, as the bank needs to balance its two mandates, promoting employment and keeping inflation at low levels.

Canada’s economic docket has been thin this week, but BoC Governor, Tiff Macklem, highlighted shifts in global trade and financial flows as the main threats to Canada’s growth and warned that inflation would go up as a consequence of the trade frictions with the US

Economic Indicator

Gross Domestic Product Annualized

The real Gross Domestic Product (GDP) Annualized, released quarterly by the US Bureau of Economic Analysis, measures the value of the final goods and services produced in the United States in a given period of time. Changes in GDP are the most popular indicator of the nation’s overall economic health. The data is expressed at an annualized rate, which means that the rate has been adjusted to reflect the amount GDP would have changed over a year’s time, had it continued to grow at that specific rate. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders?

The US Bureau of Economic Analysis (BEA) releases the Gross Domestic Product (GDP) growth on an annualized basis for each quarter. After publishing the first estimate, the BEA revises the data two more times, with the third release representing the final reading. Usually, the first estimate is the main market mover and a positive surprise is seen as a USD-positive development while a disappointing print is likely to weigh on the greenback. Market participants usually dismiss the second and third releases as they are generally not significant enough to meaningfully alter the growth picture.

Economic Indicator

Gross Domestic Product Price Index

The Gross Domestic Product (GDP) Price Index, released quarterly by the Bureau of Economic Analysis, measures the change in the prices of goods and services produced in the United States. The prices that Americans pay for imports aren’t included. Changes in the GDP price index are followed as an indicator of inflationary pressures, which may anticipate higher interest rates. A high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

AUD/USD struggles near 0.7150 as Fed hike bets and Middle East risks underpin USD

AUD/USD kicks off the new week on a weak note and hovers near Friday's low, around mid-0.7100s, as the US Dollar holds up on rising Fed rate-hike bets, bolstered by the US CPI. Furthermore, escalating Middle East tensions and clashes in the Strait of Hormuz underpin the safe-haven USD. However, hawkish RBA expectations could help limit deeper losses for the Aussie.

USD/JPY holds steady near mid-153.00s as traders await Fed/BoJ rate decisions

USD/JPY consolidates near a seven-month low touched last Tuesday as traders move to the sidelines ahead of the FOMC decision on Wednesday and the BoJ policy update on Friday. Meanwhile, a more hawkish repricing of the BoJ's normalization path supports the Japanese Yen, while rising Fed rate-hike bets and geopolitical risks underpin the US Dollar, leading to the pair's subdued price action at the start of the new week.

Gold consolidates above $4,300 as traders await Fed rate decision this week

Gold struggles to capitalize on Friday's modest bounce from sub-$4,300 levels and kicks off the new week on a subdued note as traders move to the sidelines ahead of a slew of central bank events. Meanwhile, the latest US inflation figures reaffirmed September Fed rate-hike bets and cap the non-yielding bullion. Moreover, escalating US-Iran tensions act as a tailwind for the safe-haven US Dollar, keeping XAU/USD bulls on the back foot.

Week ahead: Fed, BoJ and BoE decide amid inflation dilemma

A crucial central bank week looms for markets as both the Federal Reserve and Bank of Japan are under pressure from all sides, with their credibility at stake. The Bank of England looks set to have an easier ride, at least for now, while inflation releases will be watched too as war continues to rage in the Middle East.

CFTC Report: Japanese Yen reversal leads a broader positioning reset

The week in one sentence: Yen positioning swung back into net longs in the week to September 8, leading to a 103.0K-contract improvement. Canadian Dollar shorts also fell sharply, while Oil buying accompanied another price rise. Euro, Sterling and Swiss Franc positioning weakened despite firmer currencies, leaving those moves unconfirmed by speculative flows.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.