- US February’s PCE figures largely met expectations.
- Next week, the focus will be on Nonfarm payrolls for markets to continue placing their bets on the next Fed decisions.
- Hot data may justify a delay in policy rate cuts beyond June.
The USD/CAD pair is currently trading around the 1.3543 level on Friday, reflecting minor losses after hitting a high of 1.3560 earlier in the session. While investors digest Personal Consumption Expenditures (PCE) figures, the market will turn its attention toward forthcoming employment-related figures that may add further nuance to the Federal Reserve's (Fed) posture on a probable policy rate delay.
The PCE Price Index, preferred by the Federal Reserve for gauging inflation in the US, saw a slight uptick to 2.5% annually in February, up from January's 2.4%, meeting expectations. The monthly increase of 0.3% was slightly below the forecasted 0.4%. Core PCE, which excludes food and energy, also rose by 2.8% annually, aligning with predictions, with a 0.3% monthly increase. The upward revision of January's core PCE figures suggests a continued trend of inflation, potentially prompting the Federal Reserve to maintain higher interest rates.
Future policy decisions will be influenced by incoming data, and the health of the labor market may potentially lead to adjustments in the timing and scale of rate cuts. Strong employment figures could prompt Fed policymakers to delay rate cuts beyond June and possibly reduce the number of cuts projected for 2024 from three to two, potentially bolstering the US Dollar. As for now, the strongest case scenario continues to be three rate cuts in 2024, starting in June.
USD/CAD technical analysis
On the daily chart, USD/CAD shows a somewhat stable trend. The Relative Strength Index (RSI) primarily maintains itself in positive territory, indicating that buying pressure slightly dominates the market. However, the Moving Average Convergence Divergence (MACD) histogram printed a new red bar which may imply a weak bullish momentum.
Analyzing the Simple Moving Average (SMA), it is seen that on a broader scale, despite showing a neutral outlook in the short term, the pair is above the 20,100,200-day SMAs. This suggests that the bulls command the overall trend, as long as the bulls defend the challenged 20-day average around the 1.3530 area.
USD/CAD daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays near 1.0400 in thin holiday trading
EUR/USD trades with mild losses near 1.0400 on Tuesday. The expectation that the US Federal Reserve will deliver fewer rate cuts in 2025 provides some support for the US Dollar. Trading volumes are likely to remain low heading into the Christmas break.
GBP/USD struggles to find direction, holds steady near 1.2550
GBP/USD consolidates in a range at around 1.2550 on Tuesday after closing in negative territory on Monday. The US Dollar preserves its strength and makes it difficult for the pair to gain traction as trading conditions thin out on Christmas Eve.
Gold holds above $2,600, bulls non-committed on hawkish Fed outlook
Gold trades in a narrow channel above $2,600 on Tuesday, albeit lacking strong follow-through buying. Geopolitical tensions and trade war fears lend support to the safe-haven XAU/USD, while the Fed’s hawkish shift acts as a tailwind for the USD and caps the precious metal.
IRS says crypto staking should be taxed in response to lawsuit
In a filing on Monday, the US International Revenue Service stated that the rewards gotten from staking cryptocurrencies should be taxed, responding to a lawsuit from couple Joshua and Jessica Jarrett.
2025 outlook: What is next for developed economies and currencies?
As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.