USD/CAD remains on backfoot after steady US PCE Inflation and Canada’s weak GDP

Source Fxstreet
May 31, 2024 13:50
  • USD/CAD is under pressure after US PCE Inflation and Canadian GDP report.
  • Apart from soft monthly US core PCE inflation reading, other elements matched estimates.
  • Canada’s Q1 GDP grew at a slower pace of 1.7% on an annualized basis.

The USD/CAD pair remains vulnerable near 1.3630 as the United States Bureau of Economic Analysis (BEA) has reported that the Personal Consumption Expenditure Price Index (PCE) report for April was broadly in line with market expectations.

The report shows that the core PCE Inflation, which is Federal Reserve’s (Fed) preferred inflation gauge, grew parallel with the estimates and the prior reading of 2.8%. On a monthly basis, the underlying inflation data rose moderately by 0.2%, from the consensus and the former release of 0.3%. A 0.2% increase in Federal Reserve’s (Fed) preferred inflation gauge is consistent with the pace required to bring inflation down to the 2% target.

However, it is unlikely to boost expectations for the Fed to begin reducing interest rates from the September meeting. The scenario is historically favorable for the US Dollar. However, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, fell to 104.40. The US Dollar’s appeal is already uncertain due to downwardly revised Q1 Gross Domestic Product (GDP) data.

On Thursday, the US BEA reported that the economy expanded at a slower pace of 1.3% from preliminary estimates of 1.6%.

Meanwhile, the Canadian Dollar performs relatively stronger against the US Dollar but has weakened against other major currencies due to weak GDP figures for different timeframes. Statistics Canada reported that the economy grew by 1.7% on an annualized basis, missed the estimates of 2.2% and Bank of Canada’s (BoC) forecast of 2.8%. On a monthly basis, the economy remained stagnant as expected in March.

Weak economic growth exhibits demand of more stimulus that is fulfilled by adaptation of expansionary policy stance by the central bank. This would deepen hopes of BoC initiating the policy normalization process from the June meeting.

USD/CAD

Overview
Today last price 1.3636
Today Daily Change -0.0045
Today Daily Change % -0.33
Today daily open 1.3681
 
Trends
Daily SMA20 1.3667
Daily SMA50 1.366
Daily SMA100 1.3577
Daily SMA200 1.3575
 
Levels
Previous Daily High 1.3735
Previous Daily Low 1.366
Previous Weekly High 1.3744
Previous Weekly Low 1.3596
Previous Monthly High 1.3846
Previous Monthly Low 1.3478
Daily Fibonacci 38.2% 1.3689
Daily Fibonacci 61.8% 1.3706
Daily Pivot Point S1 1.3649
Daily Pivot Point S2 1.3617
Daily Pivot Point S3 1.3574
Daily Pivot Point R1 1.3724
Daily Pivot Point R2 1.3767
Daily Pivot Point R3 1.3799

 

 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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