- USD/CAD gains some positive traction for the second day in a row, though it lacks continuation.
- The Bank of Canada pivot on Wednesday continues to weaken the CAD and provide support for the pair.
- Expectations of lower Fed rate hikes keep USD bulls on the back foot and could cap the pair’s rise.
- Investors may also prefer to stay on the sidelines and wait for the fourth quarter US GDP release.
The pair USD/CAD it draws some buying for the second day in a row on Thursday and holds its modest intraday gains through the early hours of the European session. currently located around the 1.3400 levelthe pair now seeks to take advantage of the previous day’s rebound from the 1.3340 area, at a low of almost two weeks.
Canadian dollar hurt by Bank of Canada swing on Wednesdayby stating that the time had come to stop the rate hike cycle, which in turn is seen as support for the USD/CAD pair. Besides, weak crude oil prices do not benefit CAD, commodity-linked currency. That being said, the underlying bearish sentiment around the US dollar could act as a headwind for the pair, at least for the time being.
The firm expectations that the Federal Reserve will soften its hawkish stance keep dollar bulls on the back foot near eight-month lows. In fact, the CME’s FedWatch tool points to a more than 90% probability of a minor rate hike of 25 basis points at the next FOMC meeting ending on February 1. This will mark a further easing in the pace of the rate hike cycle, seen as a drag on US Treasury yields and the dollar.
Nevertheless, Concerns over deeper global economic downturn help limit safe-haven USD slide. Traders also seem reluctant to take directional positions, preferring to wait for the US Q4 Advanced GDP release later in the American session. Also on the US calendar on Thursday will be durable goods orders and new home sales, which could boost the dollar and USD/CAD.
In addition, the core PCE price index will be released on Friday, which will influence the Fed’s rate strategy. However, attention will remain focused on the outcome of the FOMC’s two-day policy meeting, which will be announced on next Wednesday.
USD/CAD 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.
