USD/CAD: 1.35 support could face a tough test if US data is weaker in the coming weeks – TDS

The Canadian economy experienced a strong rebound to start the new year. The CAD hardly moved after the improvement in data. As reported by economists TD Securities1.35 should offer key support but could face a tough test if US data falters in the coming weeks.

Canadian GDP starts 2023 stronger than expected

“The Canadian economy roared again in January with industry-level GDP beating market consensus for a 0.5% rise. Details were even more upbeat, with growth across the board and new forecasts for GDP to rise 0.3%. % in February.”

“The CAD was little changed after the strong GDP report. This may be clouded by the end-of-quarter rebalancing flows. That being said, USD/CAD has staged a nice reversal in a short time from 1.38.” So, to the extent that this data has altered the BOC’s pricing probabilities, the pair may already have been priced in.”

“For now, we think 1.35 will be key support for USD/CAD, but keep in mind that the pair is still trading moderately higher. If the US data is weaker in the coming weeks, this level of support could be put to the test.”

Source: Fx Street

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