The USD/CAD pair edges lower, trading near 1.4050, as the US Dollar (USD) extends its decline following a mixed set of US economic data. The US Dollar Index (DXY) dipped to a weekly low of around 106.20 after the releases.

The Q3 GDP growth estimate remained at 2.8%, aligning with expectations. At the same time, Initial Jobless Claims for the week ending November 22 surprised to the downside at 213K, slightly below the upwardly revised 215K from the prior week. However, Durable Goods Orders for October grew by just 0.2%, missing forecasts of 0.5%, indicating softening momentum in manufacturing.

Despite this, the USD remains resilient against the Canadian Dollar (CAD), primarily due to geopolitical and trade concerns. President-elect Donald Trump’s renewed threats of imposing 25% tariffs on Canada and Mexico, alongside an additional 10% on China, have pressured the CAD. Tariffs targeting Canada, a major US trade partner, are expected to weaken its export-driven economy, further dampening sentiment for the CAD.

Looking ahead, all eyes are on the US Personal Consumption Expenditure (PCE) Price Index for October, scheduled for 15:00 GMT. This inflation report will provide crucial insights into the Federal Reserve’s (Fed) December policy direction.

While USD bears dominate in the short term, potential tariff escalations and softer Canadian economic resilience may keep USD/CAD supported near the 1.4000 region.

Trade Idea:
Consider buying USD/CAD near 1.4020, targeting 1.4100, with a stop-loss at 1.3980. Trade rationale: USD support from potential tariff developments and resilient demand amid CAD’s exposure to trade uncertainties.