USDCAD Bounced off Support Despite Robust Canadian GDP Data

The USDCAD currency pair was trading up over 10 pips at writing, having given up some of its earlier gains as the Canadian dollar fought to keep pushing the US dollar lower as it has done most of the week. The loonie was boosted by the upbeat Canadian GDP data released earlier today.

According to the latest data from Statistics Canada, Canada’s real GDP grew by 0.5% on a monthly basis in January, which was an upward revision of the preliminary GDP data, which indicated that the GDP had expanded by 0.3%.

The positive January GDP reading was a welcome departure from the 0.1% contraction recorded in December 2022. The report also indicated that Canada’s GDP grew by 0.3% in February, although this is the preliminary print. 

The loonie was also boosted by the recovery witnessed in crude oil prices as tracked by the West Texas Intermediate (WTI). As a leading crude oil exporter, Canada’s economy relies heavily on oil exports as a critical foreign exchange earner. However, all the positive data was insufficient to help the Canadian dollar break the support zone. 

The USDCAD currency pair has been falling for most of the week as the Canadian dollar rallied against its US counterpart as investor expectations of further rate hikes from the Federal Reserve quickly dissipated following the recent banking crisis. 

The release of the US Personal Consumption Expenditures (PCE) Price Index report for February also did not help the dollar since the core PCE index grew by 0.3%, missing analysts' expectations of 0.4%, while the annualised figure was 4.6% versus the expected 4.7% print. 

The US personal income data also expanded by 0.3%, better than the consensus estimate of 0.2%, while personal spending grew by 0.2%, missing expectations of 0.3%. The PCE data cemented expectations that the Fed will not hike rates at its May meeting. 

Still, the currency pair did not fall further due to the current long-term support zone at 1.3500. Investors will watch the pair to see if it can break the support level next week. 

*This is not investment advice. 

The USDCAD price chart. 

The USDCAD currency pair was trading up 10.4 pips (0.08%) at writing after bouncing off a crucial support level.