- USD/CAD hit its highest level since mid-July above 1.3100.
- The Canadian economy expanded at a softer-than-expected pace in the second quarter.
- The USD struggles to gain strength after weak employment data.
The pair USD/CAD gained momentum to the upside and hit its highest level since mid-July at 1.3132 before erasing part of its daily gains. At the time of writing, the pair was up 0.1% on the day at 1.3107.
Canadian economy loses momentum
Data from Canada showed on Wednesday that the economy expanded at an annualized rate of 3.3% in the second quarter. This reading was weaker than the market expectation of 4.4% growth and caused the loonie to lose interest.
Elsewhere, the ADP reported that US private sector employment increased by 132,000 jobs in August, disappointing market expectations of a 288,000 rise by a wide margin. This data caused the US Dollar Index (DXY) to lose traction and made it difficult for USD/CAD to maintain its upward momentum. Before the opening bell on Wall Street, DXY remains sideways on the day around 108.90.
Meanwhile, crude oil prices started to rally, helping the commodity related CAD show some resistance against its rivals. A barrel of West Texas Intermediate, which fell to a nine-day low of $88.20 earlier in the day, last traded above $90.
No other major macroeconomic data will be released for the remainder of the session, but month-end flows could add to market volatility.
Technical levels
Source: Fx Street
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