USD/CAD jumps above 1.32 on disappointing Canadian GDP figures

• Canadian economy contracts in December.
• Annual core PCE in the U.S. stays unchanged at 1.9% in December.
• Coming up: Manufacturing PMI from both Canada and the U.S.

The USD/CAD pair gained nearly 100 pips in a matter of minutes after the data published by Statistics Canada revealed that the Canadian economy contracted 0.1% on a monthly basis in December. As of writing, the pair was up 0.4% on the day at 1.3220.

Further details of the report showed that the real GDP’s annual growth rate in the fourth quarter slumped to 0.4% from 2% in the third quarter and missed the market expectation of 1.2%.  

On the other hand, the U.S. Bureau of Economic Analysis announced that the core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred gauge of inflation, stayed unchanged at 1.9% in December. On a negative note, personal income declined by 0.1% in January after rising 1% in December and personal spending decreased by 0.5% in December. Despite the mixed data, the US Dollar Index was up 0.05% on the day at 96.27.

Later in the session, the IHS Markit will publish the Manufacturing PMI data for Canada and the United States. Additionally, the University of Michigan will release the final reading of the Consumer Confidence Index in February  

Technical levels to watch for