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28/06/24
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CAD Unchanged Before GDP Data
The CAD seemed unchanged on June 28, with USD/CAD trading around 1.3703 around 12:15 p.m. (GMT). Markets were looking forward to Canada’s GDP reading for April, following a flat data in the previous month. They expect Canada’s economy to grow by 0.9 percent.
Canadians have been feeling the effects of higher interest rates; fortunately, the Bank of Canada delivered a 25-bps cut to 4.75% a few weeks ago. However, BoC policymakers may not be willing to deliver another cut until inflation begins to turn downward.
Inflation rose by 2.9 percent last month relative to April’s 2.7%, dampening hopes of another rate cut at the next BoC meeting on July 18. The apex bank is embracing a cautious approach regarding more rate cuts, emphasizing that data will determine each rate decision, one at a time.
According to BoC Governor Macklem a few days ago, he does not want to cut rates too quickly and put the apex bank’s success in bringing inflation beneath 3 percent at risk. All eyes have been on the Fed’s preferred measure of inflation, the Core Personal Expenditures Consumption index.
They expect the PCE index to have fallen from April’s 0.2 percent to 0.1% last month, while the Core PCE index is expected at 2.6 percent, relative to April’s 2.7 percent. If the Core PCE declines, it would support the delivery of a rate cut in September. CME’s FedWatch says the probability of a rate cut in September is currently at 58 percent.
A look at the chart of USD/CAD shows a visit to the barrier level at 1.3711. Another barrier level exists at 1.3747, while the two support levels on the way downward exist at 1.3658 and 1.3622.
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