USD/CAD nears 1.3500 ahead of US PCE Price Index/Canadian GDP

• USD/CAD attracts some buyers on Friday following modest USD strength.
• Low oil prices undermine the loonie and provide further support to the major.
• The US PCE price index and monthly Canadian GDP were shown for some momentum.

The USD/CAD pair regains positive traction during the Asian session on Friday and looks to build on this week’s recovery move from the 1.3420 area, or the March 8 low. However, spot prices remain below the 1.3500 mark as traders wait with interest. Friday’s key US and Canadian macro data before placing aggressive directional bets.

The monthly Canadian GDP report is due out today, although the market’s focus will remain glued to the US Personal Consumption Expenditure (PCE) Price Index. Crucial US inflation data will play a key role in influencing market expectations of the Federal Reserve’s (Fed) rate cut path, which in turn will drive demand for the US dollar (USD) and provide a boost significant USD/CAD. pair.

Meanwhile, a modest rise in the USD, coupled with this week’s sharp decline in crude oil prices, which tends to undercut the commodity-linked Loonie, is providing some support to spot prices. That said, bets on another outsized Fed rate cut in November are keeping the USD capped in a familiar range sustained over the past two weeks and within striking range of the YTD low hit last week.

Apart from this, the prevailing risk environment, supported by further monetary stimulus measures from the People’s Bank of China (PBOC), should help limit the greenback stock. Therefore, it will be prudent to wait for a strong follow-through purchase before confirming that the USD/CAD pair has already reached the short-term bottom and is positioning itself for any further appreciation move.