USD/CAD sticks to gains near multi-month tops, around mid-1.3400s post-Canadian GDP

• Canadian economy recorded a 0.3% growth in January; expanded 0.3% in Q4 2019.
• The data, a modest bound in oil prices did little to provide any respite to the loonie.
• US bond yields bounce off all-time lows and extended some support to the USD.

The USD/CAD pair edged lower during the early North-American session, albeit maintained its strong bid tone near nine-month tops post-Canadian GDP report.

The pair added to its weekly gains and continued scaling higher for the third consecutive session on Friday amid the ongoing slump in crude oil prices, which tend to undermine demand for the commodity-linked currency – the loonie.

Bulls remain in control

The Canadian dollar failed to gain any respite from better-than-expected domestic GDP growth figures, showing that the economy expanded by 0.3% during the first month of 2020 as compared to a modest 0.1% expected and previous.

Meanwhile, the growth for October-December quarter matched consensus estimates and stood at 0.3% annualized pace, albeit was largely negated by a downward revision of the previous quarter's growth to 1.1% as against 1.3% reported earlier.

The readings marked a further deceleration from a strong growth of 3.7% recorded in the second quarter of 2019 and did little to provide any meaningful impetus to the major. The pair held steady just below mid-1.3400s and was further supported by an uptick in the US dollar.

A modest recovery in equity markets allowed the US Treasury bond yields to stall the recent slump and bounce off all-time lows. This eventually extended some support to the greenback and remained supportive of the bid tone surrounding the major.

Technical levels to watch