- USD/CAD trades -0.24% lower despite USD strength across the G6.
- Canadian GDP beat consensus estimates of 3.5% to print at 4.5%.
USD/CAD 1-hour chart
USD/CAD has moved lower overall in the session on Friday. The main reason for the CAD strength was the GDP reading where the data point beat analyst forecasts. Although Canadian GDP bounced back in May, it was still 15% below where it was before COVID-19. Construction, manufacturing and retail sectors led the charge higher. Statistics Canada noted 17 of the 20 sectors of the economy it tracks improved, but goods-producing industries bounced back especially strongly, up 8%. The service sector’s gain was comparatively lower, at 3.4%.
Looking at the chart, there seems to be a “basing” or consolidation pattern at relatively low levels. The orange trendline has been taken from the weekly chart and was a resistance level on 25th June 2018 and again on 2nd September 2019. If the oil price continues to struggle then there could be another test higher next week. The next resistance level on the way up is holding at the green line near 1.3446.
The indicators are still looking bearish. The MACD histogram is red and the signal lines are still below the mid-level indicating this is still a downtrend. The Relative Strength Index is also looking depressed. Overall the pair is still in a firm downtrend but if the green resistance zone breaks the price would make a higher low higher high pattern and that could be a sign of a trend change.