The Canadian dollar has posted considerable gains in Friday trade. In the European session, USD/CAD is trading at 1.3160, down 0.51% on the day.
US dollar dips as yield curves steepens
The US dollar has retreated in broad fashion on Friday, after a dramatic policy shift announcement from Federal Reserve Chair Jerome Powell. In a speech at the Jackson Hole Symposium, Powell said that the Fed would allow inflation to overshoot the 2.0% target. This shift in monetary policy means that interest rates are likely to stay very low for the foreseeable future. The US yield curve has steepened in response, which has dragged the US dollar lower.
We could see some further movement from USD/CAD in the North American session. Canada releases its monthly GDP report at 12:30 GMT, with a gain of 5.2% expected in June. The US will publish Core PCE Price Index (12:30 GMT), which is believed to be the Federal Reserve’s preferred inflation indicator. Analysts are projecting a gain of 0.5%. As well, Personal Spending (12:30 GMT) is forecast to show a gain of 1.5%, much more modest than the previous reading of 5.6%.
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USD/CAD Technical
- 1.3096 is the next resistance line, protecting the 1.31 level. This is followed by resistance at 1.3161
- USD/CAD broke below support at 1.3067 late in the Asian session. The next support level is 1.3031
- The pair continues to pull away from the 10-day MA line, after breaking below it on Wednesday
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Kenny Fisher
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