USD/CAD continues to drift close to the 1.34 level, as the pair is showing little movement for a fifth successive day. In Wednesday’s North American session, the pair is trading at 1.3374, down 0.11% on the day.
Canada GDP within expectations
The US dollar has flexed some muscle, as USD/CAD has posted two straight winning weeks. However, this week has been all quiet, as the US rally has hit the pause button. Earlier in the day, Canada released GDP, and the reading of 3.0% was a touch above the forecast of 2.9%. As the key release was within expectations, the reaction from USD/CAD has been muted. Canada has now put together three consecutive months of growth after the economy plunged 11.6% in May. Another sign that the economic recovery is gaining traction is that the critical manufacturing sector has been in expansion territory for the past two months. Manufacturing PMI, which will be released on Thursday, is expected to remain at 55.1 points. The neutral 50-level separates contraction from expansion.
US GDP slides 31.4% in Q2
Earlier on Wednesday, the US released Final GDP. This third estimate showed that the economy plunged 31.4% in the second quarter, a reflection of the economic damage caused by the Covid-19 pandemic. However, the dismal reading did not shake up USD/CAD. Investors have already digested the previous two estimates, both of which showed sharper declines than the third estimate of 31.4% – the first estimate was 32.9% and the second estimate came in at 31.7%.
In other news, Chicago PMI climbed to 62.4, up sharply from 51.2 beforehand. On the employment front, ADP Nonfarm Payrolls jumped to 749 thousand, up from 428 thousand. This easily beat the estimate of 650 thousand. If the official NFP release on Friday is also stronger than expected, the US dollar could resume its upward movement.
- 1.3422 is the next resistance line. This is followed by 1.3454
- USD/CAD has tested support at 1.3355 in the North American session. Below, we have the 10-day MA line, which remains relevant. Next, there is support at 1.3320
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