USD/CAD Loses Traction Above The 1.3200 Level; Us Gdp Is Being Monitored

During Thursday's early Asian session, the USD/CAD pair struggles to gain ground and loses momentum above 1.3200. The major pair is presently trading at 1.3204, a decrease of 0.03% on the day. As a result of the Federal Open Market Committee (FOMC) meeting, the US Dollar is weakening.

The Federal Open Market Committee (FOMC) raised its target range for the federal funds rate by a quarter percentage point to 5.25%–5.5%, a move that was entirely anticipated by the markets. This is the eleventh rate increase since the FOMC began its policy tightening in March 2022.

Fed Chairman Jerome Powell announced after the rate decision that the FOMC will evaluate all incoming data and its implications for economic activity and inflation. He added that another Fed Funds rate increase is conceivable at the September meeting if the data warrants it.

The Conference Board's Consumer Confidence Index rose to 117 in July from 110.1 (revised from 109) in June, according to data released earlier this week. In the same vein, the May Year-Over-Year House Price Index came in at 2.8%, exceeding expectations of 2.6% but falling short of the previous month's data. The data from the Fed meeting will be digested by investors, who will then look to economic data released later in the week for guidance.

On July 12, the Bank of Canada (BoC) raised interest rates by 25 basis points (bps) to a 22-year high of 5.0 percent for the Canadian dollar. Since March 2022, the central bank has raised rates ten times. Despite this, market participants anticipated that the Bank of Canada would likely not deem it necessary to increase rates further this year.

According to a survey of market participants conducted by the central bank and released on Monday, a median of participants anticipate that the bank will maintain interest rates at a 22-year high of 5.00% until the end of 2023, before reducing rates in March.

In the interim, the Canadian Dollar may see some follow-through purchasing as a result of rising oil prices. Notably, Canada is the largest exporter of oil to the United States, and greater crude prices strengthen the Canadian Dollar.

Later in the day, market participants will focus on the US Advanced Gross Domestic Product (GDP) QoQ, core Personal Consumption Expenditure (PCE) Price Index MoM, Durable Goods Orders, and Initial Jobless Claims reports. Also due on Friday is the Canadian Gross Domestic Product for May MoM. This information could provide the USD/CAD pair with direction.