USD/CAD pulls away from daily highs, looks to close flat near 1.2600
- USD/CAD remains on track to end the day unchanged.
- Canadian economy expanded by 0.7% in June as expected.
- US Dollar Index recovers its losses after dropping to two-week lows.
The USD/CAD pair climbed to a daily high of 1.2654 during the American trading hours but failed to preserve its bullish momentum. As of writing, the pair was posting small daily gains at 1.2607.
DXY pares daily losses
Earlier in the day, the data published by Statistics Canada revealed that the Canadian economy expanded by 0.7% on a monthly basis in June as expected. On a negative note, annualized GDP growth in the second quarter arrived at -1.1% and missed the market expectation of 2.5% by a wide margin.
In addition to the disappointing data from Canada, the 1% decline witnessed in crude oil prices made it difficult for the commodity-related loonie to find demand on Tuesday.
On the other hand, the US Dollar Index (DXY), which dropped to a two-week low of 92.40 during the European trading hours, is currently flat on the day at 92.65. The Conference Board's monthly report showed on Tuesday that the Consumer Confidence in the US worsened to 113.8 in August from 125.1 in July. Although the DXY's recovery is limiting USD/CAD downside, for the time being, Tuesday's price action seems to be a product of month-end flows.
On Wednesday, IHS Markit will release the August Manufacturing PMI for Canada. The US economic docket will feature the ISM Manufacturing PMI.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
