Key Points:
- USD/CAD pair trades at 1.3690, halting its decline amid a modest US Dollar rebound.
- Influenced by the upcoming Core PCE Price Index and revised Q1 GDP growth from 1.6% to 1.3%.
- 2-year yield at 4.92% and 10-year yield at 4.54%, impacting US Dollar’s advance.
- BoC rate cut expectations drop due to inflation, with Q1 GDP growth expected at 2.2%.
The USD/CAD currency pair has recently stabilised, trading at 1.3690 during the Asian session on Friday. The US Dollar halts its decline, rebounding modestly due to various economic indicators and upcoming data releases.
US GDP Growth Revised Down to 1.3% from 1.6%
The US Dollar’s rebound has been bolstered by anticipation of Friday’s Core Personal Consumption Expenditures (PCE) Price Index release. This key inflation measure will provide insights into the Federal Reserve’s future monetary policy decisions.
Meanwhile, the US GDP growth rate for Q1 has been revised down from 1.6% to 1.3% annualised, leading investors to speculate on potential policy easing. The uncertainty surrounding a possible rate cut in September adds to the market’s cautious sentiment.
US Jobless Claims Rise to 219,000, Slightly Above Forecast
In the labour market, initial jobless claims for May 2 came in at 219,000, slightly above the previous week’s 216,000 and the market consensus of 218,000. This marginal increase reflects a stable yet cautious labour environment.
Additionally, US Treasury yields could limit the advance of the US Dollar, with the 2-year yield at 4.92% and the 10-year yield at 4.54%. These yields suggest a complex interplay between short-term and long-term investor expectations regarding inflation and interest rates.
US Dollar Index at 104.80 Amid Mixed Economic Data
The US Dollar Index is currently trading at 104.80, indicating a moderate strength in the currency. This index, which measures the value of the US Dollar against a basket of major currencies, reflects the mixed economic data and ongoing market speculation about the Federal Reserve’s policy moves.
USD/CAD: Canadian Producer Prices Surge 1.5% in April
In Canada, expectations for a rate cut at the Bank of Canada (BoC) June meeting have waned due to ongoing price pressures. Producer prices rose by 1.5% in April, up from 0.9% in March, surpassing the anticipated 0.8% increase. Persistent inflation has lowered interest rates, with a 25-basis point rate cut expectation dropping to 34% from 46% last week.
USD/CAD: Canadian Q1 GDP Growth Expected at 2.2%
Statistics Canada is set to release its GDP figures for Q1 on Friday, with an expected annualised growth rate of 2.2%, up from the previous quarter’s 1.0%. This anticipated growth underscores the resilience of the Canadian economy amid global economic uncertainties.
