USD/CAD Slips Below 1.3650 as Traders Eye US PCE, Canadian GDP Data

USD/CAD Drops Slightly as Traders Await Key US and Canadian Economic Data

The USD/CAD currency pair is trading modestly lower around 1.3640 during Friday’s early Asian session, as the US Dollar (USD) continues to face headwinds from rising concerns over the Federal Reserve’s independence.

Market Focus: US PCE & Canada GDP in Spotlight

The market awaits the release of two major data points:

• US May Personal Consumption Expenditures (PCE) Price Index – the Fed's preferred inflation gauge
• Canadian April Gross Domestic Product (GDP) – key to assessing Canada’s economic momentum

These data releases are expected to inject volatility into the USD/CAD pair.

Trump’s Pressure on Fed Undermines Dollar

The Wall Street Journal reported that President Donald Trump is considering removing Fed Chair Jerome Powell before his term ends in May, reigniting concerns over political influence on monetary policy.

“This kind of Trump appointment of a shadow Fed chair will likely chip away at investor confidence in the independence of the central bank,” said Wasif Latif, Chief Investment Officer at Sarmaya Partners.

Powell's Cautious Stance on Rate Cuts

In a recent statement, Fed Chair Jerome Powell emphasized a cautious approach to rate cuts, noting the potential inflationary impact of ongoing Trump tariffs. Although a rate cut remains possible this year, the timing remains uncertain, as the Fed monitors economic data and trade negotiations.

Learn more in our full Fed rate cut outlook and USD/CAD analysis.

Key Technical Zone to Watch

• Support: 1.3615
• Resistance: 1.3680

Should today's data surprise in either direction, a break beyond these levels could define the next short-term trend.