The USD/CAD currency pair was on track to register its best weekly performance since mid-August, as robust US macro data solidified the case for higher-for-longer interest rates.
The US economy grew at an annualized rate of 4.9% in the third quarter, or the most since Q4 of 2021, a preliminary estimate showed on Thursday. Market consensus had pointed to a 4.3% GDP growth.
Consumer spending grew at an annualized rate of 4%, or the most since the final quarter of 2021, driven by consumption of housing and utilities, health care, financial services and insurance, food services and accommodations as well as non-durable goods.
The figures bolstered investor bets the Federal Reserve would probably maintain monetary conditions restrictive for a longer period, which drove the US Dollar Index up to a fresh three-week high of 106.894 on Thursday. The DXY was last little changed at 106.635.
“Certainly, the US economy is a lot more resilient than most expected. It’s both a blessing and a curse for the Fed,” Christel Rendu de Lint, head of investments at Vontobel, was quoted as saying by Reuters.
“But certainly, the chances of a soft landing look greater than most anticipated.”
As of 7:41 GMT on Friday USD/CAD was inching down 0.08% to trade at 1.3819. The major Forex pair was heading for a 0.79% weekly advance.
Yesterday the currency pair went up as high as 1.3844. The latter has been USD/CAD’s strongest level since March 10th (1.3862).
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