English
USD/CAD Remains Limited Below 1.3500; US PCE Data Is The Focus Of Attention
USD/CAD drifts to 1.3472 in response to the USD's modest decline. Annualized growth of 3.3% for the US gross domestic product in the fourth quarter of 2023 was stronger than anticipated. A rise in oil prices amid geopolitical tensions in the Middle East could strengthen the commodity-linked Loonie.
For the second consecutive day, the USD/CAD pair is trading in negative territory during the early hours of Asian trading on Friday. On Friday, all eyes will be on the publication of the Core Personal Consumption Expenditures Price Index (Core PCE) for December, the preferred inflation measure of the Federal Reserve. The USD/CAD is currently trading at 1.3472, a daily loss of 0.01%.
Thursday, the Commerce Department reported that the final three months of 2023 witnessed stronger-than-anticipated growth in the U.S. economy. The annualized growth rate of the gross domestic product (GDP) for the fourth quarter of 2023 was 3.3%, which represents a decrease from the previous estimate of 4.9%. As a consequence of the positive data, US Treasury yields marginally declined. The markets continued to anticipate that the Federal Reserve would initiate first-rate reductions in May. As per the CME FedWatch Tool, there is a 47.4% probability of a March reduction.
Furthermore, the Labor Department reported that Initial Jobless Claims in the United States increased from 189,000 the week prior to January 20 to 214,000 for the week ending January 20, which was below the market expectation of 200,000. From the previous reading of 1.806 million, the number of continuing claims increased to 1.833 million.
The Bank of Canada (BoC) maintained its key overnight rate at 5.0% on Wednesday, the fourth consecutive day that it has maintained the same benchmark. In spite of this prospective shift in emphasis from the magnitude of interest rates to their duration, the BoC does not anticipate any imminent reductions in rates, citing ongoing inflationary concerns.
Conversely, the commodity-linked Canadian Dollar (CAD) could experience an increase in value as a result of the geopolitical tensions in the Middle East and the disruption of shipping in the Red Sea, which have led to higher crude prices.
On Friday, market participants will closely monitor the December Core Personal Consumption Expenditures Price Index (Core PCE). Pending Home Sales will also be disclosed. The USD/CAD pair might obtain a distinct direction from these data.
Bonus rebate to help investors grow in the trading world!
