USD/CAD Drops to Near 1.3580 as US Dollar Pulls Back from Recent Highs
Traders as they provide insights into the health of the North American economies and could significantly influence the direction of the USD/CAD pair in the near term. With the global econoThe USD/CAD currency pair has shown a reversal from its recent climb in the previous trading session, with movements detected around the 1.3580 mark during Thursday’s Asian session. The Canadian Dollar is experiencing a boost, benefiting from a dip in the US Dollar alongside strengthening Crude oil prices.
There is a noticeable downward trend in the US Dollar Index (DXY), which is expected to continue its descent after a temporary upswing on Wednesday, positioning around 102.80 currently. The strength observed in the USD/CAD pair can be partly attributed to unexpectedly robust US Gross Domestic Product (GDP) data, with an annualized rise of 5.2% in the third quarter, surpassing both the earlier estimate of 4.9% and the market’s expectation of 5%.
Crude oil, specifically Western Texas Intermediate (WTI), has been on an uptrend for three consecutive days, currently trading near $77.90 per barrel. The momentum in crude oil prices is building up as the market anticipates the upcoming meeting of the Organization of the Petroleum Exporting Countries (OPEC+) and its allies. A key focus of the meeting is the potential proposal by major oil producers like Saudi Arabia and Russia to extend oil supply curtailments into 2024.
Market jitters over oil demand have re-emerged following the latest economic figures from China. The National Bureau of Statistics (NBS) reported a slight decrease in the Manufacturing PMI for November to 49.4, marginally down from 49.5. More notably, the Non-Manufacturing PMI has seen a contraction, hitting 50.02, which is below the anticipated 51.1, signalling weaker service sector activity.
In Canada, the spotlight is on the forthcoming release of the Gross Domestic Product Annualized figures for the third quarter, which are forecasted to show a modest increase of 0.2%. This release will be closely watched as it can influence the CAD’s performance. Meanwhile, the United States is poised to publish significant economic indicators, including Initial Jobless Claims for the week ending November 24 and data on Personal Consumption Expenditures (PCE) Price Index, which is a measure of inflation closely monitored by the Federal Reserve and could impact future monetary policy decisions.
These economic releases are critical for my still navigating through post-pandemic recovery and geopolitical tensions, the forex market remains sensitive to such economic indicators and central bank policies.