CAD improves as US GDP underperforms

The Canadian dollar has extended its rally on Thursday. USD/CAD has declined by 0.76% this week and is back below the symbolic 1.25 line.

US GDP misses forecast

US data was a disappointment, and the major haves jumped on the greenback and sent it broadly lower. Advanced GDP for the second quarter rose 6.5%. This is certainly a sharp gain, but well short of the consensus of 8.5%. The soft reading can be attributed to a fall in inventories, which is unlikely to be much of a concern. Unemployment claims also missed the consensus, as both initial and continuing claims were slightly higher than anticipated.

A September taper? Maybe. Or maybe not

There were some expectations that the FOMC meeting would shake up the markets with some tapering news, but in the end, the hype wasn’t really warranted. However, Fed Chair Jerome Powell did state that the economy would need to recover millions of jobs and inflation would need to be durable before the Fed would consider a taper in September. This gives the Fed a couple of months of inflation and employment data to determine if they can start scaling back asset purchases.

The FOMC meeting was a masterful balancing act by Jerome Powell, considering that there is a wide array of views at the Fed when it comes to the burning issue of a timeline for tapering. Powell will have to continue to navigate through some choppy waters, but the markets appear willing to show some patience, as the Fed has done a good job of communicating with the markets. Tapering is on its way, but the Fed is counselling patience and the markets appear willing to wait.


 USD/CAD Technical

  • USD/CAD faces a monthly resistance line at 1.2586. Above, there is resistance at 1.2741
  • On the downside, the pair is testing support at 1.2459. Below, there is support at 1.2352

For a look at all of today’s economic events, check out our economic calendar.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.