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  • WTI recovers above $67 in the NA session.
  • GDP growth in the U.S. in Q3 edges down to 3.5%
  • US Dollar Index fails to stay in the positive territory.

After rallying to its highest level since September 11 at 1.3160 earlier today, the USD/CAD pair reversed its course in the second half of the day and retraced all of its gains to turn flat at 1.3070. As of writing, the pair was trading at 1.3080, adding only 0.05% on a daily basis.

The USD’s market valuation on Friday remained as the primary driver of the pair’s price action. Following an upsurge to 96.86, the US Dollar Index lost its traction in the NA session after the underlying details of the GDP report showed the negative impacts of the tariffs on the economic growth. Although the U.S. Bureau of Economic Analysis’ first estimate of the real GDP expansion in Q3 came in at 3.5% to beat the analysts’ expectation, a 3.5% fall in exports and a 9.1% increase in imports revived concerns about the economy losing momentum towards the end of the year.

Commenting on the data, “the Fed projection materials from the September FOMC have 2018 GDP at 3.1%, up from 2.8% in June. With GDP at 3.23% for the first three quarters, that implies a 2.7% growth rate in the fourth quarter. Likely the economy will do better,” said  Joseph Trevisani, the senior FXStreet analyst.

Additionally, a sharp fall seen in the U.S. government bond yields further weighed on the greenback. With the 10-year yield losing more than 2% on the day, the US Dollar Index slumped to a daily low of 96.30 before staging a modest recovery. At the moment, the index is still down 0.17% on the day at 96.43.

On the other hand, crude oil prices pulled away from daily lows in the last hours with the barrel of West Texas Intermediate rising to mid-$67s and provided some extra support to the commodity-sensitive loonie.

Technical levels to consider

The initial support for the pair aligns at 1.3050 (100-DMA) ahead of 1.3000 (psychological level) and 1.2965 (Oct. 24 low). On the upside, resistances could be seen at 1.3160 (daily high), 1.3200 (psychological level) and 1.3225 (Sep. 6 high).