The USD/CAD currency pair struggled to capitalise on the previous day’s modest rally from sub-1.3400 levels and oscillated in a narrow trading zone into Friday’s Asian session. The US Dollar, reaching its lowest level since August on dovish central bank signals, caps the upside. On Wednesday, Fed Chair Jerome Powell signaled that the US central bank would soften its stance and slow interest rate hikes. Additionally, lessening inflationary pressure and low US Treasury bond yields weigh the dollar.
The US Bureau of Economic Analysis announced that the Personal Consumption Expenditures (PCE) Price Index fell to 6% YoY in October from 6.3%. The Fed’s favoured inflation measure, the yearly Core PCE Price Index, fell to 5% from 5.2% as projected. The 10-year US government yield dropped roughly two months due to weaker data. The commodity-linked Loonie is supported by the recent robust rise in crude oil prices from the YTD low, holding the USD/CAD pair at bay for now.
Trades are also cautious ahead of the US monthly jobs report. Before the upcoming December 13-14 FOMC meeting, the popular NFP will influence USD price dynamics. Traders will also use Canadian job statistics and oil price trends to find short-term USD/CAD possibilities.
Conclusion
The underlying background favours greenback bears, suggesting the major’s path of least resistance is down.