USD/CAD builds on softer Canadian GDP-led sharp rebound
| • Disappointing Canadian GDP data triggers a sharp short-covering rally.
• A goodish USD rebound/sliding crude oil prices provide an additional boost.
The USD/CAD pair built on its solid intraday rebound from over one-week lows and extended the momentum further beyond mid-1.2900s.
The pair found decent support just ahead of 50-day SMA support, around the 1.2815 region, and rallied over 150-pips after the latest Canadian GDP print showed that the economic growth slowed in the first quarter of this year to its lowest rate in nearly two years
Statistics Canada released Canada GDP data this Thursday and showed that the economic growth stood at an annualized pace of 1.3% for the first three months of the year, down from an annual pace of 1.7% in the final three months of 2017.
The number was seen as a disappointment, given that the BoC statement on Wednesday said that the economy probably grew faster than they previously expected and might have forced investors to trim bets over an immediate rate hike move.
This coupled with a goodish US Dollar rebound, supported by mostly in line US economic data and positive US Treasury bond yields, and renewed selling around crude oil prices, which tends to dent demand for the commodity-linked currency - Loonie further collaborated to the pair's strong upsurge.
With today's strong up-move, the pair has now reversed a major part of the overnight slump, led by a hawkish hold from the BoC, and remains on track to end with modest monthly gains.
Technical levels to watch
A follow-through buying interest has the potential to continue lifting the pair further towards reclaiming the key 1.3000 psychological mark, above which the pair seems all set to aim towards testing 1.3045-50 supply zone.
On the flip side, the 1.2900 handle now seems to act as an immediate strong support, which if broken might turn the pair vulnerable to head back towards challenging the 50-day SMA support near the 1.2820-15 region.
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