USD/CAD finds temporary support below 1.4000, Canadian Q3 GDP in focus – FXStreet

• USD/CAD provided a temporary cushion around 1.3980 as investors await Canadian monthly data and Q3 GDP data.
• Canada's economy is estimated to have grown 1% compared to the same quarter in the precious year, slower than the 2.1% growth in the second quarter.
• Given the strong fundamental outlook, the US dollar could rebound.

The USD/CAD pair found support near 1.3980 in Friday's European session. The loonie pair is measuring cushioning as the US dollar (USD) rebounds after hitting a two-week low and the US dollar index (DXY) has gained some buying interest near 105.60.

After nearly 12 weeks of gains, the greenback faced a sharp decline this week as President-elect Donald Trump's nomination of Scott Bessent to be U.S. Treasury Secretary forced traders to scale back so-called “Trump trading.” are. .

Bessent's comments in an interview with the Financial Times (FT) last weekend suggested he would focus on implementing President Trump's economic policies without disrupting geopolitical harmony. He also supported reducing the budget deficit to 3% of gross domestic product (GDP), a non-inflationary scenario for the U.S. economy.

However, market experts are confident in the outlook for the US dollar. “Month-end portfolio rebalancing weighed on the U.S. dollar, causing it to weaken against other major currencies,” analysts at Brown Brothers Harriman said in a note. It added: “The better economic outlook for the US relative to other major economies suggests that the underlying dollar appreciation trend remains intact.”

Financial markets think tanks are optimistic about the U.S. economic outlook, given strong gross domestic product growth and the potential for President Trump's tariff policies to boost demand for domestically produced goods and services. .

In trading on Friday, investors are awaiting Canada's September and Q3 GDP data to be released at 1:30pm Japan time. Canada's GDP was flat in August, but is estimated to have grown by 0.3%. On a year-on-year basis, economic growth is expected to be 1% slower than the 2.1% growth in the previous quarter of this year.

The weak GDP data will likely raise expectations that the Bank of Canada (BoC) will cut interest rates by another 50 basis points (bps) at its December monetary policy meeting. The central bank also cut its key borrowing rate by 50 bps in October.