The USD/CAD Exchange Rate Remains Near 1.2820 as Investors Await US Core PCE Data

The USD/CAD pair is trading sideways in the early Asian session, owing to uncertainty around Thursday's release of US core Personal Consumption Expenditures (PCE). Market predictions anticipate a reading of 5.4 percent, down from the earlier record of 5%. This may increase the likelihood of Jerome Powell, the Federal Reserve's (Fed) chairman, adopting an excessively confrontational tone in May.

The asset has been climbing higher over the last week as forecasts of a Federal Reserve interest rate hike have grown. Following Jerome Powell's comments at the International Monetary Fund (IMF) conference that a 50 basis point (bps) rate hike by the Fed in May is on the table, an announcement of the same has remained a formality. As a result, investors are particularly focused on the additional advice that the Fed will provide in May's monetary policy statement. Given the acceleration of inflation and the regularity with which full employment has been maintained, investors should brace for a constrained liquidity environment for the remainder of the year.

Meanwhile, loonie bulls are less effective when oil prices remain stable. Russia's supply concerns, combined with downward revisions to global GDP predictions and pandemic fears in China, are preventing the black gold from making significant moves during recent trading sessions.

Apart from the US Core PCE, investors' attention will be drawn to the US Gross Domestic Product (GDP) figures due on Thursday. Annualized GDP growth of 1.1 percent is below the preceding print of 6.9 percent, according to a preliminary estimate.

USD/CAD