USD/CAD dips below 1.26 after US & Canada data

The USD/CAD pair came under a heavy selling pressure in the early NA session following the macro data releases from Canada and the United States. After dropping to a fresh daily low at 1.2555 with the first initial reaction, the pair retraced some of its losses and is now trading at 1.2565, losing 0.45% on the day.

Although the personal income in the U.S. increased by 0.4% on a monthly basis in July after staying unchanged in June, the personal spending came in at 0.3%, missing the market estimate of 0.4%. Moreover, the PCE price index, favorite inflation gauge of the Federal Reserve, rose by 0.1% from June to July but eased to 1.4% on a yearly basis from 1.5%. Weighed by the data, the US Dollar Index erased a big portion of its daily earning and eased towards the 93 handle. At the moment, the index was at 93.05, still up 0.25% on the day.

On the other hand, the data released by the Statistics Canada showed that the GDP growth advanced to 4.5% on a quarterly basis in the second quarter of 2017 from 3.7% and surpassed the market expectation of 4.5%. 

Furthermore, crude oil prices are recovering yesterday's losses on Thursday with the barrel of West Texas Intermediate adding 1.2% at $46.50, providing an additional boost to the commodity-sensitive loonie. At the top of the hour, pending home sales from the U.S. will be released.

Technical outlook

With today's retreat, the RSI indicator on the daily graph moved below the 30 handle, suggesting that the bearish momentum is building up. The pair could face the first technical resistance at 1.2640 (50-DMA), 1.2700 (psychological level) and 1.2780 (Aug. 15 high). On the downside, supports align at 1.2535 (10-DMA), 1.2500 (psychological level) and 1.2415 (Jul. 27 low)

Today's data from the U.S. and Canada

• Canada: Real GDP rose 1.1% in the second quarter, following a 0.9% gain in the first quarter
• US: Personal income increased $65.6 billion (0.4%) in July
• US: Weekly initial claims was 236,000, an increase of 1,000 from previous week
• US-based employers announced plans to cut payrolls by 33,825 in August