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USD / CAD - Canadian dollar hoping for support from January GDP

- Key US PCE inflation data due.

- Risk sentiment improves following better than expected Chinese PMI data.

- US dollar opens higher on profit taking ahead of data.

USDCAD snapshot: open 1.3543-48, overnight range 1.3510-1.3563, close 1.3523, WTI $74.47, Gold $1978.52

The Canadian dollar bounced off of resistance and retreated to the middle of its overnight range.

Canada January GDP is expected to show a rise of 0.3% but the results will only impact USDCAD trading if they deviate sharply from the forecast.

Overnight, USDCAD dipped from Thursday’s close of 1.3523 to 1.3510 following better than expected Chinese PMI data, which gave the commodity bloc currencies a lift. For the record, March NBS Manufacturing PMI rose to 51.9 (forecast 51.5, previous 52.6) while Non-Manufacturing PMI climbed to 58.2, which is the highest reading since 2011..

The gains didn’t last due to caution ahead of the upcoming US Personal Consumption and Expenditures report. Reportedly, it is Fed Chair Jerome Powell’s preferred measure of inflation. Headline PCE is expected to dip down to 53.3 from 53.4 and the more important Core-CPI reading is expected to be unchanged at 4.7%. A higher than expected core PMI result would push back against the market hope that the FOMC will pause hiking interest rates at the May meeting.

EURUSD retreated from 1.0925 -1.0865 due to caution ahead of the US inflation data. Eurozone inflation was mixed. Headline fell to 6.9% y/y in March vs 8.5% in February, while core inflation rose 1.2% m/m from 0.8% previously.

GBPUSD traded in a 1.2355- 1.2422 range with prices chopped about my mixed economic data. Q4 GDP rose 0.1% q/q (previous 0.0%) while UK house prices fell 3.1% y/y in March.

USDJPY rallied in a 132.60-133.588 range. Tokyo inflation was higher than expected at 3.3% y/y (forecast 2.7%) and the unemployment rated rose to 2.6% from 2.4%.

AUDUSD bounced in 0.6672-0.6737 range after initial support from better than expected Chinese PMI data faded. The currency pair was undermined by a Wall Street Journal story suggesting the RBA leave rates unchanged at the next meeting.