- US economic data includes more positive than negative surprises.
- The dollar goes up, then down, and then bounces.
- USD/CAD returns to previous range after falling to 1.3300.
The USD/CAD bounced strongly in the last few minutes, pared losses and broke above the key 1.3350 zone again. The dollar is volatile on Thursday after the US economic reports and in anticipation of the FOMC meeting next week.
Down, but…
US economic data beat expectations. The economy grew at an annual rate of 2.9% during the fourth quarter, above the 2.6% market consensus. GDP price indicators reported a slowdown greater than expected. Initial claims for jobless benefits fell to the lowest level since April 2022. The Chicago Fed National Activity Index rose in December to -0.49 from -0.51. Durable Goods Orders rebounded 5.6% in December against the market consensus of 2.5%.
The numbers strengthened the US dollar, which hit new all-time highs across the board. Crude oil prices and market sentiment also helped. The USD reversed its upward trend at the open on Wall Street. Over the past several hours, the US dollar has recovered most of the lost ground as US yields rose and optimism faded.
Volatility sentiment prevails keeping USD/CAD undecided. The pair fell to 1.3301, marking its lowest since mid-November, and then rose again to the 1.3355 zone. If it consolidates well below 1.3350 a retest of 1.3300 looks likely, while if it holds above the pair could continue to move in the 1.3350/1.3450 range.
On Wednesday, the Bank of Canada raised interest rates by 25 basis points, as expected, signaling it will pause the tightening cycle. The FOMC meeting will take place next week. The Fed is expected to raise rates by 25 basis points. Attention will be on clues about the future trajectory.
technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
