- A combination of factors assisted USD/CAD to gain some positive traction on Friday.
- A softer risk tone, elevated US bond yields revived demand for the safe-haven USD.
- Weaker Canadian GDP print, a fresh leg down in oil prices undermined the loonie.
- The markets had a rather muted reaction to the mixed US PCE Price Index data.
The USD/CAD pair shot to fresh daily tops during the early North American session, with bulls making a fresh attempt to conquer the 1.2400 round-figure mark.
A strong follow-through uptick in the US Treasury bond yields allowed the US dollar to stage a solid rebound from one-month lows touched in reaction to dismal US GDP print on Thursday. This, in turn, was seen as a key factor that assisted the USD/CAD pair to attract some buying on the last day of the week and rally nearly 70 pips from the daily swing lows, around the 1.2330-25 region.
The intraday positive move picked up pace in the last hour following the release of the Canadian monthly GDP report, which showed that the economy expanded by 0.4% in August. This marked a notable recovery from a modest decline recorded in August but was well short of market expectations for a 0.7% growth and turned out to be a key factor that weighed on the Canadian dollar.
From the US, the Fed's preferred inflation gauge – the Core PCE Price Index – held steady near 30-year highs in September and came in at 3.6% YoY, slightly below 3.7% anticipated. Additional details showed that Personal Income declined significantly, by 1.0% MoM, while Personal Spending rose +0.6% MoM. Nevertheless, the data indicated that consumer cost pressures are getting entrenched.
This, in turn, validated market expectations that the Fed would be forced to adopt a more aggressive policy response to contain stubbornly high inflation. This was evident from elevated US Treasury bond yields. In fact, the yield on the benchmark 10-year US government bond climbed back to 1.61%, which, along with a softer risk tone, continued benefitting the safe-haven greenback.
Apart from this, a fresh leg down in crude oil prices undermined the commodity-linked loonie, which was seen as another factor that provided a goodish lift to the USD/CAD pair. It will now be interesting to see if the pair is able to capitalize on the move and confirm a near-term bullish breakout through a downward sloping channel extending from September swing highs.
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 holds losses near 1.1350 as US Dollar gains on US-China trade optimism
EUR/USD consoldiates losses near 1.1350 in European trading on Friday. Broad US Dollar resurgence on optimism surrounding the US-China trade war de-escalation keeps the he pair undermined. Trade talks and US data remain in focus.
GBP/USD stays pressured near 1.3300 after UK Retail Sales data
GBP/USD remains under moderate selling pressure near 1.3300 despite the upbeat UK Retail Sales data for March. The pair feels the heat of the solid US Dollar rebound, aided by a Bloomberg report, which indicated China may suspend its 125% tariff on select US imports.
Gold drops below $3,300 with traders buying into Trump's comments on talks with China
Gold price is seeing more profit taking this Friday, erasing all of Thursday’s gains, and looks set to close off this week in the red. The move down comes amid increasing confusion on what is the status of the trade conflict between the United States and China, with the US President giving the impression that talks are taking place and China denying it.
Ethereum: Accumulation addresses grab 1.11 million ETH as bullish momentum rises
Ethereum saw a 1% decline on Friday as sellers dominated exchange activity in the past 24 hours. Despite the recent selling, increased inflows into accumulation addresses and declining net taker volume show a gradual return of bullish momentum.
Five fundamentals for the week: Traders confront the trade war, important surveys, key Fed speech Premium
Will the US strike a trade deal with Japan? That would be positive progress. However, recent developments are not that positive, and there's only one certainty: headlines will dominate markets. Fresh US economic data is also of interest.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.