- USD/CAD moves little as traders adopt caution ahead of economic data from both countries.
- Headline PCE is forecast to rise 2.6% YoY, while core PCE is expected to increase 2.9% in July.
- The commodity-linked CAD could strengthen on the back of rising crude Oil prices.
USD/CAD halts its three-day losing streak, hovering around 1.3750 during the Asian trading hours on Friday. The pair maintains its position as the US Dollar (USD) advances as the United States (US) economy grew in the second quarter. The US Bureau of Economic Analysis (BEA) released Gross Domestic Product (GDP) Annualized data on Thursday, showing an increase of 3.3% in the second quarter, a faster pace than the initially estimated 3.1% increase and 3.0% prior.
Traders are awaiting the July Personal Consumption Expenditures (PCE) Price Index due later in the North American session, the last key inflation release before the Federal Reserve’s September meeting. Headline PCE is forecast to rise 2.6% year-over-year in July, while core PCE is expected to increase 2.9% over the same period. The upbeat prints may fade the ongoing dovish sentiment surrounding the US Federal Reserve (Fed) policy outlook. Moreover, Canada’s GDP data will also be eyed on Friday.
The market sentiment turns cautious over Fed independence concerns, driven by the recent remarks from US Vice President JD Vance. Vance confirmed, in an interview with USA Today on Thursday, the end of the Federal Reserve’s autonomy. He noted: “I don’t think we allow bureaucrats to make decisions about monetary policy and interest rates without any input from the people that were elected to serve the American people…POTUS is much better able to make these determinations.”
The USD/CAD may lose its ground as the commodity-linked Canadian Dollar (CAD) may gain ground amid improved crude Oil prices. It is worth noting that Canada is the largest Oil exporter to the United States (US). West Texas Intermediate (WTI) Oil price remains stronger for the third consecutive day, trading around $64.10 per barrel at the time of writing.
Crude Oil prices gain ground amid persistent geopolitical tensions and supply risks, as traders track Ukrainian drone strikes on Russian export terminals and await potential comments from US President Donald Trump on tighter sanctions.
