USD/CAD fades Canadian GDP-led spike to 1.2940 supply zone

   •  Weaker Canadian GDP growth numbers provide a boost. 
   •  Gains were further supported by upbeat/inline US data.
   •  A modest USD weakness fails to lift beyond immediate hurdle.

The USD/CAD pair faded a knee-jerk spike and quickly retreated around 30-35 pips from session tops, touched during the early NA session.

The pair rebounded sharply from an intraday low level of 1.2889 and rallied hard in reaction to disappointing Canadian monthly GDP print. This coupled with an unexpected decline in the Canadian Raw Materials Price Index (RMPI) and slightly better-than-expected/in-line US economic releases lifted the pair to the 1.2940 supply zone.

The US Dollar, however, struggled to gain any follow-through traction and prompted some fresh selling near a technically important resistance zone. The negative factor, to some extent, was negated by retracing crude oil prices, which tends to weigh on the commodity-linked currency - Loonie, and helped the pair to hold its neck above the 1.2900 handle, at least for the time being.

Thursday's economic docket also features the release of Chicago PMI and revised UoM consumer sentiment, which along with the USD/oil price dynamics could help traders grab some short-term opportunities.

Technical levels to watch

The up-move might continue to confront some fresh supply near the 1.2940 region, above which a fresh bout of short-covering could assist the pair back towards reclaiming the key 1.30 psychological mark.

On the flip side, sustained weakness below the 1.2890-85 region might prompt some fresh selling and drag the pair back towards 1.2840-35 intermediate zone en-route the 1.2815-10 strong horizontal support.