USD/CAD refreshes weekly lows post-Canadian GDP, focus remains on FOMC

• The Canadian economy expanded by 0.2% in May as against 0.1% expected.
• Bullish Oil prices further underpinned Loonie and added to the selling bias.
• A subdued USD demand does little to support ahead of the FOMC decision.

The USD/CAD pair quickly retreated around 20-pips in the last hour and dropped to fresh weekly lows, around the 1.3130-25 region post-Canadian GDP.

The pair failed to capitalize on its uptick to an intraday high level of 1.3158, rather met with some fresh supply after the Canadian monthly GDP report showed that the domestic economy expanded 0.2% in May. The reading was slightly better than 0.1% growth expected but still marked a further deceleration from the previous month’s 0.3% growth.

The commodity-linked currency – Loonie was further underpinned by the prevailing bullish sentiment surrounding Crude Oil prices, which coupled with a subdued US Dollar price action – despite better than expected ADP report on private-sector employment, further collaborated to the pair’s ongoing downslide.

Further losses, however, are likely to remain limited as investors might refrain from placing any aggressive bets and prefer to wait on the sidelines ahead of the highly anticipated FOMC monetary policy update, due to be announced later during the US trading session.

Hence, it will be prudent to wait for a strong follow-through selling below the 1.3100 handle before confirming that the recent corrective bounce from yearly lows has already run out of the steam and positioning for any further near-term depreciating move.

Technical levels to watch