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The Canadian dollar managed  to recover against the US dollar before the release of Canadian GDP, and now makes a small retreat as Canada prints 0.3% growth in the month of July, the first month of Q3, exactly as expected.

Putting expectations aside, this is a nice growth rate, but it didn’t exceed expectations. These expectations were reflected in a drop of about 50 pips in USD/CAD before the release. The pair fell to 1.0413 and is now marginally higher at 1.0430.

Second tier US figures released at the same time were more or less in line with early expectations. US  Personal Spending came out at +0.2%, exactly as expected. Personal income dropped by 0.1% in comparison with a rise of 0.1% that was predicted. The  Core PCE Price Index showed a rise of 0.1%, marginally lower than +0.2% that was estimated.

In June Canada’s economy grew by 0.2%, correcting a disappointing contraction of 0.3% in May.

The Canadian dollar managed to recover some of its losses against the greenback, with USD/CAD falling as low as 1.0143. This was mostly due to corrections seen across the board as the month and quarter reached an end. Hopes for progress in Europe also helped.

But towards the end of the week, also the corrections were corrected and USD/CAD crossed 1.04, levels last seen in September 2010. The double downgrade of New Zealand sure contributed to the weakening of another commodity currency – the loonie.

1.0380 provides some support. Significant resistance is at 1.0510. For more lines and analysis, see the USD/CAD forecast.