USD/CAD stays calm near 1.3280 post recent losses, US Core PCE, Canada GDP eyed

• USD/CAD receives downward pressure on the subdued US Dollar.
• US real GDP reinforces speculation on the Fed’s dovish stance on monetary policy.
• Higher WTI price could contribute support for the Canadian Dollar.

USD/CAD hovers around 1.3280 during the Asian session on Friday near its four-month low at 1.3275 registered in the previous session. The USD/CAD pair experienced a plunge on a weaker US Dollar (USD), which could be attributed to the softer US economic data released on Thursday. Moreover, mixed Canada’s Retail Sales data might have provided minor support to underpinning the Canadian Dollar (CAD).

The recent data from the US Bureau of Economic Analysis (BEA) shows that Gross Domestic Product Annualized (GDP) grew at a slightly lower rate of 4.9%, deviating from the expected consistency at 5.2%. Meanwhile, Core Personal Consumption Expenditures (QoQ) decreased to 2.0% from the previous 2.3%. However, Initial Jobless Claims for the week ending on December 15 were 205K, slightly below the expected 215K.

The subdued real GDP is adding weight to speculations of potential easing by the US Federal Reserve (Fed). These heightened expectations are a response to the Fed’s recent dovish stance in its latest meeting. Despite the growing speculations, Federal Reserve (Fed) officials performed a balancing act by urging caution and discouraging premature conclusions.

On Canada’s side, Canadian Retail Sales (MoM) for October slipped to 0.7% versus September’s 0.5% (revised down from 0.6%). However, Retail Sales excluding motor vehicles and vehicle parts ticked up to 0.6% versus the previous 0.1% (also revised down from 0.2%).

West Texas Intermediate (WTI) price trades higher around $74.40 per barrel at the time of writing, extending gains for the second successive day. The recent uptick in Crude oil prices can be attributed to ongoing tensions in the Middle East, particularly after Houthi attacks on ships in the Red Sea. More shipping companies like Germany’s Hapag-Lloyd and Hong Kong’s OOCL are choosing to avoid the Suez Canal waterways.

Additionally, the geopolitical landscape sees Angola deciding to exit the Organization of the Petroleum Exporting Countries and its allies (OPEC+). Angola’s oil minister expressed that the country’s interests were not being served within the group.

Market participants will observe Canada’s Gross Domestic Product (MoM) for October, which is expected to notice an improvement. On the US docket, Core Personal Consumption Expenditures – Price Index data, and Michigan Consumer Sentiment Index will be eyed on Friday.