The Canadian Dollar (CAD) eased its pace of decline against the US Dollar (USD) on Friday but remains under pressure, testing 18-week intraday lows before staging a modest rebound. The Loonie capped off a week of sustained losses as Greenback demand stayed firm.
Canadian GDP rebound provides thin support
Canada’s July Gross Domestic Product (GDP) grew 0.2% MoM, rebounding from June’s 0.2% contraction and topping market forecasts of a 0.1% increase. The data helped limit CAD downside, though momentum remains subdued.
Meanwhile, US Dollar weakness returned after the US core Personal Consumption Expenditures (PCE) Price Index came in line with expectations, reinforcing market bets on another Federal Reserve (Fed) rate cut in October. Futures pricing shows nearly 90% odds of a 25 bps trim on October 25.
Daily market movers: CAD steadies but struggles
- The Canadian Dollar is flat against the US Dollar after briefly touching fresh 18-week lows
- Canada’s GDP growth accelerated to 0.2% in July, outpacing expectations
- US PCE inflation stayed above the Fed’s 2% target but did little to shift policy bets
- Markets maintain strong odds of a second Fed rate cut in October
- Next week’s US-heavy calendar features September Nonfarm Payrolls (NFP)
Technical outlook: USD/CAD bias turns bullish
USD/CAD has been grinding higher since mid-September, accelerating sharply in recent sessions. The sustained breakout above both the 50-day and 200-day EMAs signals bullish momentum, with follow-through buying suggesting traders are chasing strength.
The pair is now probing the 1.3950 resistance zone. A daily close above this level would expose 1.4000 and potentially 1.4100 if upside momentum persists. On the downside, support is firm at 1.3880 near the 200-day EMA, keeping the broader bias tilted to the upside.
