|

Canadian Dollar recovers as softer US Dollar offsets pressure from weak GDP data

  • USD/CAD reverses intraday gains as improving sentiment surrounding a potential US-Iran deal weighs on the US Dollar.
  • Traders are awaiting final approval from Trump on a proposed 60-day memorandum of understanding (MOU).
  • Canada Q1 GDP contracts 0.1%, marking a second consecutive quarter of negative growth.

USD/CAD reverses its intraday gains on Friday as a softer US Dollar (USD) helps the Canadian Dollar (CAD) recover from weakness driven by softer-than-expected Gross Domestic Product (GDP) figures. At the time of writing, the pair trades around 1.3780 after rising to 1.3829 earlier in the American session.

On the geopolitical front, hopes for a potential US-Iran deal are reducing safe-haven demand for the US Dollar. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trims earlier gains on Friday and slips below the 99.00 mark.

Traders are awaiting final approval from US President Donald Trump on a proposed 60-day memorandum of understanding (MOU). The agreement would extend the current ceasefire and reopen the Strait of Hormuz.

Trump said on Friday that “the naval blockade will now be lifted” and added that he would be meeting in the Situation Room “to make a final determination” on Iran.

However, Iran has not yet confirmed or finalized the agreement, keeping some uncertainty in markets. Tehran also continues to say that shipping through the Strait of Hormuz is under its control, while the US insists the waterway must remain unrestricted.

On the data front, Canada’s economy contracted in the first quarter of the year on an annualized basis, marking the second consecutive quarterly decline. Statistics Canada reported that GDP contracted 0.1% in Q1, missing expectations for 1.5% growth. Two straight quarters of economic contraction is commonly seen as a technical recession.

On a monthly basis, GDP declined 0.1% in March after expanding 0.2% in February, missing market expectations for a flat reading.

Separately, The Wall Street Journal reported that the Trump administration is expected to propose changes to the US-Mexico-Canada Agreement (USMCA) that would require half of a vehicle’s components to be made in the United States.

Author

Vishal Chaturvedi

I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.

More from Vishal Chaturvedi
Share:

Editor's Picks

GBP/USD strengthens above 1.3350 ahead of US CPI data

The GBP/USD pair trades in positive territory around 1.3360 during the Asian trading hours on Tuesday. However, the potential upside for the major pair might be limited amid fears of an escalating US-Iran conflict. The US June Consumer Price Index inflation report will take center stage later on Tuesday. 


EUR/USD posts modest gains above 1.1350 as traders await US CPI inflation release

The EUR/USD pair posts modest gains near 1.1385 during the Asian trading hours on Tuesday. Nonetheless, the potential upside for the major pair might be limited amid renewed US military strikes against Iran. Traders will take more cues from the US June Consumer Price Index inflation data, which will be released later on Tuesday. 

Gold recovers further beyond $4,000; focus remains on US CPI, Fed's Warsh

Gold builds on its steady intraday recovery from a nearly two-week low, touched during the Asian session, and climbs to the $4,023-$4,024 region in the last hour. The US Dollar pauses following a strong two-day rally as bulls turn cautious ahead of the latest US consumer inflation figures and Federal Reserve Chair Kevin Warsh's testimony. This is seen as a key factor offering some support to the bullion.

Trump urges Senate to pass CLARITY Act as crypto bill nears crucial vote

US President Donald Trump on Monday urged the US Senate to swiftly pass the Digital Asset Market Clarity Act, following the death of Senator Lindsey Graham, who passed away unexpectedly over the weekend at age 71. "In honor of Senator Lindsey Graham, a big supporter, the US Senate should pass the CLARITY Act," Trump wrote in a Truth Social post.

Oil jumps, bonds break and the AI trade starts losing its shine

Wall Street finally ran into the collision course it had spent weeks pretending would never happen. Oil surged, bonds sold off, the dollar caught a bid, and the most crowded corner of the equity market began to buckle under its own weight.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.