The USD/CAD pair struggles to gain momentum following a rebound from recent lows, hovering around the mid-1.3600s during the Asian session today. While nearly unchanged for the day, the pair faces a cautious market backdrop amidst key upcoming US economic data.
Investors await the final US Q1 GDP data on Thursday, followed by Friday’s release of the PCE Price Index, a crucial indicator for Federal Reserve policy decisions. Market sentiment hinges on these figures, influencing USD demand and potentially impacting the USD/CAD pair.
Uncertainty persists regarding the timing of potential Fed rate cuts, despite recent hawkish signals from FOMC members suggesting a measured approach to monetary policy. While inflation pressures show signs of moderation, expectations for a September rate cut persist, tempering USD strength.
On the Canadian front, strong consumer inflation figures for May have reduced expectations of a July rate cut by the Bank of Canada (BoC). Additionally, rising crude oil prices bolster the commodity-linked Canadian Dollar (CAD), adding further resistance to USD/CAD upside moves.
Given these dynamics, any upward movement in the pair is likely to face selling pressure at higher levels, potentially limiting sustained gains. Traders are advised caution amid the mixed economic signals and pending US data releases shaping near-term market sentiment.
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