USD/CAD spikes and retreats post-Canadian GDP, back around 1.3300 handle

Haresh Menghani FXStreet

• Canadian economy contract 0.1% m/m in Sept., yearly growth rate matches estimates.
• The post-FOMC minutes USD buying /fresh slide in oil prices remained supportive

The USD/CAD pair held on to its daily gains and refreshed session tops, around the 1.3325 region post-Canadian GDP, albeit quickly retreated few pips thereafter.

Data released this Friday showed that Canadian economy unexpectedly contracted by 0.1% m/m in September and the yearly growth stood at 2.0% during the third quarter of 2018, indicating a notable slowdown from previous quarter's 2.9% q/q growth.

The negative headline readings, to some extent, was negated by stronger Canadian industrial product prices for Oct., though did little to prompt any meaningful selling amid the post-FOMC minutes buying interest around the US Dollar demand.

Meanwhile, a fresh wave of selling around oil markets, with WTI crude oil prices down nearly 1.5% for the day, seemed to dent demand for the commodity-linked Loonie and might now help the pair to regain some positive traction.

Technical levels to watch

A strong follow-through buying has the potential to lift the pair back towards multi-month tops, around the 1.3355-60 area, above which the momentum could further get extended towards yearly highs resistance near the 1.3385-90 region.

On the flip side, the 1.3275-70 region is likely to protect the immediate downside, which if broken might accelerate the fall further towards the 1.3225-20 horizontal zone en-route the 1.3200 handle and 1.3185 strong 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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