The Canadian Dollar (CAD) experienced a mixed trading session on Thursday, with minimal movement against major currencies due to a lack of significant domestic economic data. Market participants are now turning their attention to Friday’s Canadian Gross Domestic Product (GDP) update for April, while closely monitoring the upcoming US Personal Consumption Expenditure (PCE) Price Index, a crucial inflation gauge for the Federal Reserve (Fed).
Market Drivers: Mixed US Data and Anticipation for Canadian GDP and US PCE
- US Economic Data: The release of US economic data on Thursday, including Durable Goods Orders, Q1 GDP, Initial Jobless Claims, and Core Personal Consumption Expenditures, painted a mixed picture, leading to a cautious market sentiment.
- Canadian GDP Expectations: Analysts anticipate a rebound in Canadian GDP for May, with a forecast of 0.3% growth after a flat reading in the previous month.
- US PCE Price Index: The release of the US core PCE Price Index on Friday is expected to reveal a slight easing of inflation, which could have significant implications for the Fed’s monetary policy decisions.
Technical Analysis: CAD Consolidates Near 1.3700, Bullish Bounce Potential
The USD/CAD pair is trading within a narrow range near the 1.3700 handle, with the 200-hour Exponential Moving Average (EMA) acting as a key resistance level. The pair recently found support at the 50-day EMA, suggesting a potential bullish bounce. However, the lack of clear direction and mixed US data are keeping the pair in a consolidation phase.
Key Takeaways:
- The Canadian Dollar remains relatively stable despite mixed US economic data.
- Market participants are eagerly awaiting Friday’s Canadian GDP update and US PCE Price Index release.
- The USD/CAD pair is consolidating near 1.3700, with potential for a bullish bounce if it can break above the 200-hour EMA.