USD / CAD bounces above 1.2470, appears to break two-day losing streak

• USD / CAD gained traction in US trading hours on Friday.
• The Canadian economy contracted 0.3% in May as expected.
• Annual core inflation for the US PCE rose to 3.5% in June.

The pair USD / CAD It fell to a daily low of 1.2420 at the start of the US session on Friday, but achieved a decisive rebound. At time of writing, the pair was up 0.25% on the day to 1.2475 and was on track to break a two-day losing streak. Despite the recent rally, the pair is looking to end the week in negative territory.

DXY recovers 92.00 before the weekend

The renewed strength of the USD helped the USD / CAD gain traction in the second half of the day. US data showed on Friday that the price index for core personal consumption spending (PCE), the Fed’s preferred indicator of inflation, rose to 3.5% annually in June. However, this reading was lower than the market expectation of 3.7% and failed to trigger a significant market reaction.

However, aggressive comments from St. Louis Fed Chairman James Bullard and the poor performance of the major Wall Street indices provided a boost to the USD.

Bullard argued that the Fed should start reducing asset purchases this fall and noted that he expects to see the initial rate hike in the final quarter of 2022. The US dollar index, which fell to a monthly low of 91.78, is currently climbing. 0.26% on the day at 92.12.

On the other hand, Statistics Canada announced that the Real Gross Domestic Product contracted 0.3% in May, as expected.

Meanwhile, a barrel of West Texas Intermediate (WTI) is up 0.75% near $ 74 on Friday, limiting the USD / CAD rally ahead of the weekend.

Technical levels