Investing.com - The Canadian dollar CADUSD remained stuck in a tight range vs. its US counterpart on Monday, as traders await key economic data this week.
Traders will be keenly awaiting the release of the U.S. Q4 GDP revised data on Wednesday, and the PCE price index, the Fed’s preferred measure of inflation, on Thursday. Thursday will also see the release of Canadian GDP data.
The Canadian dollar has been pressured vs the USD in recent weeks as expectations for a rate cut from the U.S. Federal Reserve have been pushed back to June following hawkish Fedspeak and resolutely robust economic data.
Meanwhile, a rate cut from the Bank of Canada is expected as soon as April, as Canadian economic indicators point to a slowdown and the latest CPI reading came in cooler than expected.
“A lingering hangover from last week’s CPI data has the Canadian dollar holding above the 1.35 mark today in some range-bound trading,” noted Kyle Chapman, FX markets analyst at Ballinger & Co in London.
The Canadian dollar also failed to capitalize on last week’s NVIDIA (NASDAQ:NVDA) driven rally as economic headwinds grew.
Chapman notes, “The loonie sputtered while much of the G10 capitalized on last week’s tech-fueled risk rally, weighed down by a softening rates outlook and an inert economy.”
Looking ahead for the loonie on a fundamental level, Adam Button, Chief FX Strategist at Forexlive.com noted in an interview with Traders Summit that he is “more bearish on the Canadian dollar” than almost ever before given the growing headwinds for the Canadian economy.
Button notes that “on the economic performance side there's a lot to worry about right now”, even if the Bank of Canada moves to a rate cut in April.
‘We'll see some pain and whether it manifests in lower house prices or lower consumer spending… ultimately there is going to be a huge drag in the Canadian economy”.
On a technical level for the pair, Scotiabank (TSX:BNS) analysts note that “USD/CAD sees some short-term trend support at 1.3475/1.2480 but a clear move below 1.3452 (40-DMA today) is needed to prompt some technical softness in funds”
“Narrowing Bollinger bands also suggests some risk of an increase in near-term volatility, with the greater scope for movement perhaps more to the downside at the moment."