USD/CAD surges beyond the 1.3220 mark, Canadian GDP, US PCE eyed

• The stronger Greenback supports USD/CAD, trading at around 1.3225, up 0.02% for the day.
• The US real Gross Domestic Product (GDP) expanded at 2.4% annually, above the consensus of 1.8%.
• Investors anticipated that the Bank of Canada (BoC) would likely not see the need to raise rates further this year.

The USD/CAD pair attracts some buyers and jumps to 1.3225 during the early Asian session on Friday. The Greenback gains momentum following the upbeat US economic data on Thursday. Market participants will keep an eye on the Canadian Gross Domestic Product (GDP) and the US Core Personal Consumption Expenditure (PCE) data for fresh impetus later in the North American session.

The data released on Thursday showed the US real Gross Domestic Product (GDP) expanded at a 2.4% annualized rate, above the market consensus of 1.8% by a wide margin and following the 2% growth reported in the first quarter. Additionally, the GDP Price Index in the second quarter decreased to 2.6% from 4.1% in the first quarter, and the Core Personal Consumption Expenditures decreased to 3.8% from 4.8% in the same period. The annual figure is expected to drop from 4.6% to 4.2%. 

Furthermore, Durable Goods Orders rose 4.7% on a monthly basis to $302.5 billion. Initial Jobless Claims declined by 7,000 to 221,000 in the week ending July 22. It is the lowest reading in five months. 

Following the July policy meeting, the Federal Open Market Committee (FOMC) hiked its interest rate by a quarter percentage point to a target range of 5.25%–5.5%, as expected. It is the 11th rate hike since the FOMC began tightening policy in March 2022. Fed Chairman Jerome Powell stated that the FOMC will assess the totality of incoming data and its implications for economic activity and inflation. He added that it's possible to raise the Fed funds rate again at the September meeting if the data warrants it.

Earlier this week, the Conference Board's Consumer Confidence Index rose to 117 in July from 110.1 (revised from 109) in June. On the same line, the House Price Index for May YoY came in at 2.8%, above expectations of 2.6% but below the prior month's data.

On the other hand, market players anticipated that the Bank of Canada (BoC) would likely not see the need to raise rates further this year. According to a survey of market participants released by the central bank on Monday, a median of the participants anticipate the bank to maintain interest rates at a 22-year high of 5.00% until the end of 2023 before cutting the rates in March.

However, gains in the oil and gas sectors offset a slowdown in the manufacturing sector. Crude oil has gained for four consecutive weeks as supply is expected to tighten. It’s worth noting that Canada is the leading oil exporter to the United States, and higher crude prices strengthen the Canadian Dollar.

Later in the day, attention will turn to the Canadian Gross Domestic Product (GDP) data. The figure is expected to rise by 0.3% from the previous reading of 0%. The US Core Personal Consumption Expenditure (PCE) index, the Fed's preferred inflation gauge, will be released from the US docket. The inflation figure is expected to drop from 4.6% to 4.2% annually. Market players will take cues from this data and find opportunities around the USD/CAD pair.