The USD/CAD pair is attracting some buyers on Friday, supported by modest USD strength and bearish oil prices that undermine the Canadian dollar. Spot prices remain below the 1.3500 mark as traders await key macro data from the US and Canada before placing aggressive directional bets. The monthly Canadian GDP report and the US Personal Consumption Expenditure (PCE) are due for release later today.
The crucial US inflation data will play a key role in influencing market expectations about the Federal Reserve’s rate-cut path, which will drive USD demand and provide meaningful impetus to the USD/CAD pair. Bets for another oversized interest rate cut by the Fed in November keep the USD confined in a familiar range and within striking distance of the year-to-date low touched last week. The prevalent risk-on environment, bolstered by additional monetary stimulus measures from the People’s Bank of China, should contribute to capping the safe-haven Greenback.
It will be prudent to wait for strong follow-through buying before confirming that the USD/CAD pair has bottomed out in the near term and positioning for any further appreciating move. The USDCAD price shows positive movement, breaching the 1.3471 level and attempting to stabilize above it. This hints at a possible recovery and the formation of a bullish wave on an intraday basis.
usd/cad influenced by usd strength
However, technical indicators provide negative signals that might push the price to decline again. Holding above the 1.3471 level could lead to gains starting by visiting the 1.3562 area, while breaking below it could reactivate a negative scenario targeting 1.3360.
The expected trading range for today is between 1.3420 support and 1.3560 resistance. The Canadian dollar reached its highest point in nearly four weeks against the US dollar on Tuesday, bolstered by China’s economic stimulus measures and concerns over potential oil supply disruptions in the Middle East. This follows a period of cautious commentary from Bank of Canada Governor Tiff Macklem regarding further interest rate cuts.
Karl Schamotta, chief market strategist at Corpay, stated, “Risk appetite is rebounding across markets after Chinese authorities unveiled a raft of stimulus measures designed to boost growth and reinvigorate market sentiment.” China, being a major importer of Canadian commodities like oil, significantly influences the Canadian economy. Oil prices also rose due to China’s stimulus and potential disruptions in the Middle East, along with hurricane threats to US supply. Futures increased by 1.4 percent to $71.33 a barrel, while energy and metal mining stocks propelled Canada’s S&P/TSX Composite index to a record high.
At a conference in Toronto, Macklem discussed the Bank of Canada’s progress toward reducing inflation to the 2 percent target, indicating that rate cuts remain possible as inflation continues to decrease. Canadian government bond yields showed a mixed performance along a steeper curve.
- FXStreet.”USD/CAD approaches 1.3500 ahead of US PCE Price Index/Canadian GDP”.
- Economies.”The USDCAD price attempts to recover – Forecast today – 27-09-2024″.
- BenefitsAndPensionsMonitor.”Canadian dollar climbs as China’s stimulus boosts global risk appetite”.