USD/CAD spikes to 1.35 after US GDP data, quickly returns to negative territory near 1.3470

• First estimate of Q1 GDP growth in the U.S. beats estimates.
• Underlying details of the report doesn’t confirm the strong growth rate.
• US Dollar Index eases toward the 98 handle.

The USD/CAD pair quickly jumped to 1.35 after the growth data from the U.S. helped the greenback gain traction. Nonetheless, with markets paying close attention to the details of the publication, the pair reversed its direction and was last seen losing 0.13% on a daily basis at 1.3470.

In its first estimate, the U.S. Bureau of Economic Analysis said that the real GDP in the first quarter of 2019 expanded by an impressive 3.2% to surpass the analysts’ estimate of 2.1%. However, the publication revealed that trade, inventories, and government spending, which are not considered to be sustainable contributors to the economy,  made strong contributions to the GDP growth in the first quarter to suggest that the growth rate is likely to retreat in the second quarter.  

Furthermore, the Personal Consumption Expenditure (PCE) price index rose by 0.6% following the previous quarter’s reading of 1.5% and hinted at soft inflation. Following a spike to a fresh 2019 high of 98.33, the US Dollar Index turned south and was last seen losing 0.11% on the day at 98.05.

Later in the session, markets will be paying close attention to the UoM’s Consumer Sentiment Survey. There won’t be any macroeconomic data releases from Canada. Meanwhile, the barrel of West Texas Intermediate is down 1.5% on the day near $64, limiting the pair’s downside for the time being.

Technical levels