• USD/CAD trimmed some of its intraday gains amid a modest dollar pullback following US PCE inflation data.
• The current decline in crude oil prices undermined the loonie and continued to provide some support.
• The monthly report on Canadian GDP did not serve to boost the currency.

The pair USD/CAD It quickly pulled back a few pips from the weekly high following US and Canadian macro data, and was last seen trading around 1.2900 during the early American session.

The US Bureau of Economic Analysis reported that the core personal consumption price index (PCE) – the Fed’s preferred gauge of inflation – rose 0.3% month-on-month in May. This figure was slightly lower than the 0.4% forecast and was in line with the previous month’s reading. Furthermore, the annual rate moderated in line with expectations, to 4.7% from 4.9% in April.

Additional data revealed that personal spending growth slowed markedly to 0.2% in May and the previous month’s reading was also revised down to 0.6% from 0.9% initially reported. The weaker data, coupled with a further decline in US Treasury yields, forced the dollar to trim some of its intraday gains and capped the USD/CAD pair.

However, the decline remains cushioned by the ongoing pullback in crude oil prices, which tends to undermine the commodity-linked loonie. The worsening of the global economic outlook, which could slow the recovery in fuel demand, and the increase in fuel inventories in the US pushed crude prices away from the maximum of a week and a half reached the previous day.

This largely overshadowed Canada’s monthly GDP report, which showed the economy expanding 0.3% in April. This marked a sharp slowdown from the 0.7% growth recorded the previous month. However, the pullback data did not serve to give a significant boost to the Canadian dollar or to influence the USD/CAD pair.

Technical levels