USD/CAD sags on Powell inflation comments

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

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.
Kenny Fisher

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