USD/CAD sticks to gains near multi-month tops post-US GDP, focus remains on Powell’s speech
• The USD moves little following the preliminary release of US GDP data.
• Renewed weakness in oil prices undermine Loonie and remain supportive.
• Traders seemed reluctant to place aggressive bets ahead of Powell’s speech.
The USD/CAD pair held on to its strong daily gains near multi-month tops, albeit had a rather muted reaction to the prelim US GDP print.
The US Dollar moved little and remained near two-week tops after the second version of the US GDP print confirmed the original estimate of an annualized growth rate of 3.5% during the third quarter of 2018.
“US economic growth in Q3, confirmed at 3.5% was never the problem. It's the slope down to 2.5% in Q4 and beyond that should worry the Fed. Whether rate increases are the cause is debatable but the governors do not want to be blamed for a return to the post-recession doldrums,” Joseph Trevisani, FXStret's senior analyst said after the US GDP report was made public on Wednesday.
Meanwhile, crude oil prices reversed early strong gains and retreated over 2.0% from daily tops. The prevalent bearish sentiment surrounding oil markets exerted some additional pressure on the commodity-linked Loonie and remained supportive of the pair's ongoing bullish momentum to the highest level since late-June.
With a combination of supporting factors driving the pair higher for the fourth consecutive session on Wednesday, traders still seemed reluctant to place any aggressive bets and preferred to wait on the sidelines ahead of the Fed Chair Jerome Powell's scheduled speech, later during the US trading session.
Technical levels to watch
A follow-through buying has the potential to continue lifting the pair further towards 2018 highs resistance near the 1.3380-85 region, set in June. On the flip side, the 1.3300 handle is likely to protect the immediate downside, which if broken might prompt some aggressive long-unwinding trade and accelerate the slide towards the 1.3240-35 support area.