In Friday’s European session, the USD/CAD pair continues its downward trajectory, reaching 1.3650. The Canadian Dollar faces pressure as the US Dollar struggles to make gains despite anticipation surrounding the release of the United States core Personal Consumption Expenditure Price Index (PCE) data for April, scheduled for 12:30 GMT.
Economists anticipate a steady increase in core PCE inflation by 0.3% monthly and 2.8% annually. A higher-than-expected inflation reading could diminish the likelihood of the Federal Reserve (Fed) reducing interest rates starting from the September meeting, bolstering the US Dollar and bond yields. Conversely, softer numbers would have the opposite effect.
The US Dollar Index (DXY), tracking the Greenback against major currencies, hovers around 104.75, subdued by downward revisions to the Q1 Gross Domestic Product (GDP) estimate. This revision raised hopes for Fed interest rate cuts, with the economy expanding at a slower 1.3% pace due to decreased consumer spending compared to the preliminary estimate of 1.6%.
Meanwhile, market sentiment leans towards risk aversion following China’s disappointing Manufacturing and Non-Manufacturing PMI data, stirring concerns about global economic prospects. S&P 500 futures have incurred losses in the European session.
In Canada, the Canadian Dollar awaits the release of monthly and Q1 GDP data at 12:30 GMT. March’s GDP is projected to remain stagnant following a 0.2% expansion in February. Weak GDP figures may heighten expectations for the Bank of Canada (BoC) to initiate interest rate reductions starting from the June meeting.
Related Topics:
The Strength of Euro & CAD: An In-Depth Analysis
The AUD to Canadian Dollar Exchange Rate: An Overview
Understanding the Value of the GBP in CAD
