USD/CAD finds resistance near 1.3200, looks to close second straight week higher
- Upbeat GDP data lifts US Dollar Index above 98.
- WTI clings to daily gains to help CAD limits its losses.
- USD/CAD remains on track to post gains for second straight week.
The USD/CAD pair extended its weekly rally and tested the 1.32 handle for the first time since late June. However, with the trading action turning subdued as we approach the weekend, the pair retreated from its daily highs and was last seen trading at 1.3184, still adding 0.17% on a daily basis.
US economy shows resilience in Q2
The broad-based USD strength drove the pair's price action throughout the week. The US Dollar Index, which tracks the greenback against a basket of six major currencies, continued to push higher on Friday after the GDP data published by the US Bureau of Economic Analysis (BEA) showed that the slowdown in the economic growth was not as severe as expected in the second quarter of the year.
Following the 3.1% growth witnessed in the first quarter, the US economy expanded by 2.1% on a yearly basis in the second quarter, according to the first estimate of the BEA. This reading also came in better than the analysts' estimate of 2.1% and provided a fresh boost to the USD.
Assessing the report, “We expect that real GDP will continue to grow between 2% and 2.5% in coming quarters," said Wells Fargo analysts.
"That said, inflation continues to run below the Fed’s target of 2%, and the FOMC seems to be concerned about some of the uncertainties related to trade and other geopolitical factors that cloud the economic outlook.”
Meanwhile, following the sharp drop witnessed on Wednesday, the barrel of West Texas Intermediate is posting modest recovery gains on Friday, helping the commodity-related CAD limit its losses vs the USD.
Technical levels to watch for