USD/CAD sidelined above 1.2800 ahead of busy US-data next week
The USD/CAD is trading at around 1.2834 down 0.30% on Friday as the loonie has been mainly trading in the 1.2810 and 1.2900 range throughout the week.
Earlier in the week Stephen Poloz, Bank of Canada’s Governor testified before a parliamentary committee. He was cautiously optimistic about economic conditions saying that he was seeing the economy picking up after a slowdown in the first quarter of the year. He forecast inflation to exceed the BoC’s 2% target at some point in 2018. The target rate for overnight deposit with commercial banks is kept at 1.25%, however, analysts expect a rate hike in May. As a matter of fact, the policymakers wish to conclude the NAFTA negotiations before any rate hike. The NAFTA talks “will take a break until May 7, allowing time for consultations with the auto industry in Mexico and for U.S. Trade Representative Robert Lighthizer to visit China,” according to Reuters.
The Fed is in a hiking rate cycle and the BoC is forecast to hike in May, which explains the range between 1.2810 and 1.2900 range this week. The USD strength stemming from rising bond yields was not really felt against the CAD.
Earlier on Friday, the US Gross Domestic Product and the quarterly readings of the Personal Consumption Expenditure came above expectations.
Next week will be an important week in the US with the FOMC meeting on Wednesday and the Non-Farm-Payroll on Friday while Monday will see the favorite inflation indicator of the Fed, the Personal Consumption Expenditure (PCE)