USD/CAD – US spending data boost the greenback

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<li><strong>US PCE m/m 0.2%, core PCE m/m 0.2% </strong></li>
<li><strong>US spending increases 0.7% in December</strong></li>
<li><strong>USDCAD doesn’t break double top neckline</strong></li>
</ul>
<p>Inflation, income and spending data for the US was released on Friday and broadly speaking the numbers were in line with expectations, with one outlier.</p>
<p>Spending last month increased 0.7%, comfortably exceeding the 0.5% that was expected. It also came on top of the upward revision to the November reading, which increased to 0.4% from 0.2% previously. All things considered, it’s another sign that the US consumer and economy are in very healthy shape going into the new year.</p>
<p>That it was released alongside inflation data – the Fed’s preferred PCE reading – will be additionally comforting for investors as it suggests it’s not coming at the expense of inflationary pressures heating up again. They’re now running at a rate much more consistent with the Fed’s 2% target, especially over the last few months. A March rate cut still looks a very real possibility.</p>
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<p><strong>USDCAD pares losses after data</strong></p>
<p>The US dollar is still down against its Canadian counterpart on the day but it’s pared a lot of this since the release.</p>
<p><strong>USDCAD Daily</strong></p>
<p><a href="https://www.marketpulse.com/wp-content/uploads/2024/01/tUmOG3oq.png" target="_blank" rel="noopener"><img loading="lazy" class="aligncenter wp-image-809605" src="https://www.marketpulse.com/wp-content/uploads/2024/01/tUmOG3oq-1024×565.png" alt="" width="620" height="342" srcset="https://www.marketpulse.com/wp-content/uploads/2024/01/tUmOG3oq-1024×565.png 1024w, https://www.marketpulse.com/wp-content/uploads/2024/01/tUmOG3oq-300×166.png 300w, https://www.marketpulse.com/wp-content/uploads/2024/01/tUmOG3oq-768×424.png 768w, https://www.marketpulse.com/wp-content/uploads/2024/01/tUmOG3oq-1536×847.png 1536w, https://www.marketpulse.com/wp-content/uploads/2024/01/tUmOG3oq-2048×1130.png 2048w" sizes="(max-width: 620px) 100vw, 620px" /></a></p>
<p>Source – OANDA</p>
<p>What’s interesting is it came at a time when a potentially significant breakout was possible. The price had just rebounded off the 50% Fibonacci retracement level for the second time, a potentially bearish signal, and may have then broken the neckline of a double top, as per the 4-hour chart below. A break of this could have been very bearish. Now it’s less clear, although that level, and the 50 Fib, are key.</p>
<p><strong>USDCAD 4-Hour</strong></p>
<p><a href="https://www.marketpulse.com/wp-content/uploads/2024/01/XFXyAFGQ.png" target="_blank" rel="noopener"><img loading="lazy" class="aligncenter wp-image-809606" src="https://www.marketpulse.com/wp-content/uploads/2024/01/XFXyAFGQ-1024×565.png" alt="" width="619" height="342" srcset="https://www.marketpulse.com/wp-content/uploads/2024/01/XFXyAFGQ-1024×565.png 1024w, https://www.marketpulse.com/wp-content/uploads/2024/01/XFXyAFGQ-300×166.png 300w, https://www.marketpulse.com/wp-content/uploads/2024/01/XFXyAFGQ-768×424.png 768w, https://www.marketpulse.com/wp-content/uploads/2024/01/XFXyAFGQ-1536×848.png 1536w, https://www.marketpulse.com/wp-content/uploads/2024/01/XFXyAFGQ-2048×1131.png 2048w" sizes="(max-width: 619px) 100vw, 619px" /></a></p>