Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Canadian Dollar little changed vs USD as market await key economic data

Published 2024-02-26, 05:48 p/m
Updated 2024-02-26, 05:48 p/m
© Reuters. - 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 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."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.