USD/CAD inches higher to mid-1.2600s, CAD GDP and US data in focus

Haresh Menghani FXStreet

The USD/CAD pair was seen building on previous session's strong up-move and has now jumped to near two-week highs, beyond mid-1.2600s.

Wednesday's strong ADP report and GDP revision provided an additional boost to the US Dollar's recovery move and has been one of the key factors behind the pair's sharp rebound from closer to July lows support near mid-1.2400s.

• The Fed will like the US Q2 GDP data: momentum much firmer than expected - ANZ

This coupled with, widening of Canadian current account deficit, to $16.3 billion in the second quarter, further helped the pair to decisively break through the 1.2600 heavy supply zone.

Moreover, weaker crude oil prices, following the weekly EIA report, which tends to dampen demand for the commodity-linked currency - Loonie, could also be attributed to the pair's strong up-move of over 200-pips from 4-week lows touched on Tuesday.

Investors' focus now shifts to today's economic docket, featuring the key release of monthly Canadian GDP and US macro data, due for release later during the NA session.

• Key data preview: US economy PCE deflator coming up - Nomura

Technical levels to watch

Immediate resistance is pegged near 1.2675-80 zone, above which the pair is likely to move past the 1.2700 handle and test 50-day SMA hurdle near the 1.2710 region.

On the flip side, any pull-back below 1.2620 level now seems to find support near the 1.2600 handle, which if broken could accelerate the slide back towards 1.2560-55 strong horizontal support.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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