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- The USD/CAD pair is under pressure after the US PCE inflation report and the Canadian GDP report.
- Aside from the weak monthly reading for US core PCE inflation, other items matched estimates.
- Canada’s GDP in the first quarter grew at a slower pace of 1.7% year over year.
USD/CAD remains weak near the 1.3630 area as the US Bureau of Economic Analysis (BEA) reports that personal consumption expenditures Price index The April personal consumption expenditures (PCE) report was broadly in line with market expectations.
The report shows that core personal consumption expenditures inflation, the Fed’s preferred measure of inflation, grew in line with estimates and the previous reading of 2.8%. On a monthly basis, core inflation data rose moderately by 0.2%, from the expected and previously released 0.3%. A 0.2% increase in the Federal Reserve’s preferred measure of inflation is consistent with the pace required to reduce inflation to the 2% target.
However, it is unlikely to boost expectations about Nourish it To start cutting interest rates from the September meeting. The scenario is historically favorable for the US dollar. but, US dollar index (DXY), which measures the value of the dollar against six major currencies, fell to 104.40. The attractiveness of the US dollar is already uncertain due to downwardly revised Q1 GDP data.
On Thursday, the US BEA reported that the economy expanded at a slower pace of 1.3% than the initial estimate of 1.6%.
Meanwhile, the Canadian dollar performed relatively stronger against the US dollar but weakened against other major currencies due to weak GDP numbers in different time frames. Statistics Canada reported that the economy grew by 1.7% year-over-year, missing estimates of 2.2% and the Bank of Canada (BoC) forecast of 2.8%. On a monthly basis, the economy remained stagnant as expected in March.
Weak economic growth demonstrates the demand for further stimulus achieved through adaptation of the expansionary policy stance by the central bank. This would deepen hopes that the Bank of Canada will begin the policy normalization process from its June meeting.
