USD/CAD resists rising US Dollar amidst outstanding US GDP figures

USD/CAD registered minuscule losses on Thursday in a session that witnessed the US Dollar (USD) as the strongest currency, which rose on better-than-expected US economic data which failed to boost the USD/CAD. The USD/CAD is trading at 1.3249 after hitting a high of 1.3285.

Bolstered US economic performance fails to boost USD/CAD; market eyes upcoming Canadian data

Key economic indicators of the US economy pushed aside recession fears that reignited during the last week. The US Gross Domestic Product  (GDP) for the first quarter exceeded the prior’s reading of 1.3%, climbed past the 2% market, crushing estimates, sending US Treasury bond yields soaring more than ten basis points. Additional data revealed the tightness of the labor market, as Initial Jobless Claims for the week ending June 24 climbed by 239K, below forecasts of 265K, and halted three weeks of rising unemployment claims, suggesting the labor market remains solid, ahead of the following week’s June Nonfarm Payrolls report.

As abovementioned, the US 2-year Treasury bond yield surged toward the 4.9% threshold, while the 10-year note rate, which finished at 3.842%, gained 13 basis points. The US Dollar Index (DXY), a measure of the greenback’s value against a basket of peers, advanced 0.33%, up at 103.302.

Following a robust performance by the US economy over the past month, speculation regarding further monetary policy tightening by the US Federal Reserve (Fed) has increased. In his recent discourse during the Eurozone session, Fed Chair Jerome Powell underscored the consensus of the Federal Reserve Open Market Committee (FOMC) regarding the probable implementation of two more rate hikes by the close of the year.

Odds for a 25 bps rate hike in July increased to 87%, while traders shifted their view of only one rate increase as chances for the November meeting augmented to 33.7%, according to the CME FedWatch Tool.

On the Canadian front, the economic agenda was absent on Thursday. Still, data expected on Friday, like the Gross Domestic Product (GDP) and the Bank of Canada outlook survey, will shed some light on the economic status of Canada. The Core Personal Consumption Expenditures (PCE) would be featured alongside the Consumer Sentiment and the Chicago PMI on the US front.

USD/CAD Technical Levels