Yesterday USDCAD extended its rise reaching a high price level of 1.38478 before rebounding near 1.38224. USDCAD bullish sentiment started in mid-July and is still showing a strong rally and reaching a higher than previous month high.
Yesterday the Bank of Canada (BoC) again reduced interest rates by 25 basis points to 4.50%, in line with analyst forecasts of 4.50% from the previous 4.75%. According to Commerzbank FX strategists further rate cuts are possible.
According to Commerzbank FX strategist Michael Pfister, the CAD will still be under pressure until the end of the year, as a cut in interest rates will only provide a pause in profits in the real economic sector.
On the other hand, a strong US GDP is another reason weighing on CAD. In the GDP Advanced report, US economic data grew at a high speed of 2.8%, double the previous release of 1.4%. Previously, analysts predicted GDP growth of 2.0%. On the other hand, US Unemployment Claims data also fell by 235k from the previous 245k, further supporting the strengthening of the USD, this value is lower than analyst estimates for Unemployment Claims of 237k.
Today investors will focus on US Personal Consumption Expenditures (PCE) or CPI data, which is the Fed's most preferred tool in considering interest rate policy. Data for June showed a PCE value of 0.1% in line with economists' expectations. Analysts expect the PCE to rise 0.2% from the previous 0.1% if the actual data is bigger than expected which usually has a positive impact on the USD.
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Yesterday the Bank of Canada (BoC) again reduced interest rates by 25 basis points to 4.50%, in line with analyst forecasts of 4.50% from the previous 4.75%. According to Commerzbank FX strategists further rate cuts are possible.
According to Commerzbank FX strategist Michael Pfister, the CAD will still be under pressure until the end of the year, as a cut in interest rates will only provide a pause in profits in the real economic sector.
On the other hand, a strong US GDP is another reason weighing on CAD. In the GDP Advanced report, US economic data grew at a high speed of 2.8%, double the previous release of 1.4%. Previously, analysts predicted GDP growth of 2.0%. On the other hand, US Unemployment Claims data also fell by 235k from the previous 245k, further supporting the strengthening of the USD, this value is lower than analyst estimates for Unemployment Claims of 237k.
Today investors will focus on US Personal Consumption Expenditures (PCE) or CPI data, which is the Fed's most preferred tool in considering interest rate policy. Data for June showed a PCE value of 0.1% in line with economists' expectations. Analysts expect the PCE to rise 0.2% from the previous 0.1% if the actual data is bigger than expected which usually has a positive impact on the USD.
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