usd-cadSkerdian Meta•Friday, February 28, 2025•2 min read Add an article to your Reading ListRegister now to be able to add articles to your reading
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Skerdian Meta•Friday, February 28, 2025•2 min read
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USDCAD bounced 2.5 cents higher this week, after the US PCE inflation, despite a jump in Canadian GDP for Q4.
After signing a 25% tariff on imports from Canada and Mexico, President Donald Trump made several statements that fueled uncertainty. Initially, the market interpreted his remarks as a possibility of canceling the tariffs if Canada cooperated. This was followed by a postponement until early March, then speculation of another delay until April. However, Trump later clarified that the tariffs would indeed take effect in March.
During this period, the USD/CAD exchange rate experienced significant volatility. In early February, it surged to a record high of 1.4792 after a strong bullish gap, only to reverse sharply the same week with an even larger bearish candlestick, pulling the pair down to 1.4150.
USD/CAD Chart Weekly – Bouncing Hard Off the 20 SMA
Today, two key economic reports impacted the USD/CAD pair. The US PCE inflation report, the Federal Reserve’s preferred measure of inflation, was released alongside Canada’s GDP data, which was expected to show a return to growth in December after contracting in November.
US January PCE Report![US PCE]()
Core PCE (Excluding Food & Energy)
- Year-over-year: +2.6% (as expected, prior +2.8%)
- Month-over-month: +0.3% (as expected)
- Unrounded core: +0.285% (prior +0.156%, expected +0.27%)
- Excluding food, energy, and housing: +0.3% m/m (prior +0.2%)
- Supercore (services ex-shelter): +0.2% m/m, +3.1% y/y (lowest since Feb 2021)
Headline PCE
- Year-over-year: +2.5% (as expected)
- Month-over-month: +0.3% (as expected)
- Unrounded headline: +0.325% (prior +0.2557%, expected +0.31%)
Consumer Spending & Income (January)
- Personal income: +0.9% (expected +0.3%, prior +0.4%)
- Personal spending: -0.2% (expected +0.1%, prior +0.7% revised to +0.8%)
- Real personal spending: -0.5% (prior +0.4%, revised to +0.5%)
- Savings rate: 4.6% (prior 3.8%)
Core PCE is stabilizing, indicating inflation may be back on an improving trend. Strong income growth stands out, but lower spending, particularly on vehicles (likely due to weather), suggests a temporary dip that could reverse with better conditions.
Canada Q4 GDP Report – Key Highlights
- Annualized GDP growth: +2.6% (expected +1.8%, prior +1.0%)
- YoY annualized GDP: +2.6% (expected +1.8%)
- MoM GDP: +0.2% (expected +0.3%, prior -0.2%)
- Implicit price index QoQ: +0.9% (prior +0.6%)
- YoY GDP: +2.36% (revised up from 1.49%)
Household spending adds to GDP growth
Stronger-than-expected growth suggests easing interest rates are supporting the economy. Household spending and exports are driving growth, potentially linked to anticipated US tariffs. US trade data aligns with this trend, indicating a possible front-loading of exports ahead of policy changes.
USD/CAD Live Chart
USD/CAD
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank’s local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
www.fxleaders.com