Canadian Dollar holds steady as markets roil on US GDP figures

• Canadian Dollar tries to keep a lid on Greenback.
• Canada remains absent from the economic calendar until next week.
• US GDP jumped on shelter and healthcare spending, crimping rate cut bets.

The Canadian Dollar (CAD) heaved on Thursday, tossed around by general market flows as investors reacted to an unexpected surge in US Gross Domestic Product (GDP) figures for the second quarter. Odds of a September rate cut from the Federal Reserve (Fed) are still sky-high and baked in as functionally a sure thing, but some fraying at the edges has seen rate trader bets fall from 100% to 85% overnight.

Canada is absent from the economic calendar until next Wednesday’s GDP print for May and the Canadian week-late S&PJuly Purchasing Managers Index (PMI) print next Thursday. Both data prints are mid-tier, and are unlikely to drive much market momentum, especially with the Fed’s latest rate call on the cards for next Wednesday.

Daily digest market movers: CAD holds in place as Greenback roils on GDP upset

• US Annualized GDP rose to 2.8% in Q2, well above the forecast 2.0% and lurching higher from the previous 1.4%.
• The GDP Price Index eased to 2.3% from the previous 3.1%, even further below the forecast 2.6%.
• US Durable Goods Orders also declined sharply in June, printing a -6.6% decline MoM compared to the forecast 0.3% and previous 0.1%.
• Rate traders were spooked enough to pull back slightly on bets of a Fed September rate cut bet, trimming odds of at least a quarter-point cut on September 18 to 85% from the previous day’s 100%.
• Next up will be US Personal Consumption Expenditures Price Index (PCE) inflation on Friday. Median market forecasts broadly expect (or hope) that YoY PCE inflation will tick down to 2.5% from the previous 2.6%.

Technical analysis: Canadian Dollar pushes back to flat after fear-driven Greenback spike

The Canadian Dollar (CAD) holds close to flat against the Greenback on Thursday and comes in broadly mixed across the market heading into the end of the trading week. The CAD is down around one-fifth of one percent against the Euro (EUR), and up around the same against the Pound Sterling (GBP).

USD/CAD briefly rallied into an eight-month high of 1.38492 before easing back to the 1.3800 handle. 1.3850 proved too heavy a technical barrier for bidders to cross, keeping the pair’s long-running supply zone priced in above 1.3750 intact. With a zone rejection on the cards, the challenge for Greenback buyers will be to prevent an extended backslide to the 200-day Exponential Moving Average (EMA) at 1.3600.

USD/CAD hourly chart

USD/CAD daily chart