USD/CAD finds support right above 1.3600 ahead of US inflation, Canadian GDP data

• The US Dollar is trimming some losses on Friday after a nearly 1% depreciation earlier this week.
• Weak US data has boosted hopes of Fed rate cuts ahead of the US PCE inflation release.
• In Canada, the GDP is expected to show that the economy stagnated in April.

The US Dollar has found some buyers at the 1.3610 area and is trading with marginal gains on Thursday, with investors awaiting key data releases from the US and Canada, due later today.

The pair, however, remains on its back foot, trading 0.9% lower so far this week, as the easing geopolitical concerns, coupled with weak US data and higher hopes of Fed interest rate cuts over the next months, have crushed the USD across the board.

Investors awaiting US PCE Prices Index figures

In the US, Thursday’s GDP and Jobless Claims figures confirmed the soft economic prospects anticipated by previous releases and increased pressure on the Federal Reserve to adopt a less restrictive policy to support growth.
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In this context, May’s PCE Prices Index data, the Fed’s favourite inflation gauge, will provide further insight into the impact of Trump’s tariffs on consumer prices. The market consensus anticipates a moderate increase in price pressure, which might boost hopes of further Fed cuts and send the US Dollar to fresh lows.

The Canadian Dollar, on the other hand, has appreciated less than other major currencies, weighed by the sharp decline on Oil prices following the Middle East ceasefire.

Later today, Canadian monthly GDP is expected to show that the economy stalled in April, following a 0.1% growth in March. The Canadian Dollar would be vulnerable to a negative surprise that might increase fears of an economic recession.