- The Canadian Dollar tested fresh seven-month highs against the US Dollar on Monday
- A quiet trading start due to the US holiday, as traders prepare for upcoming key Canadian GDP data amid concerns of a growth slowdown.
The Canadian Dollar (CAD) started the trading week strong, reaching fresh seven-month highs against the US Dollar (USD) and pushing USD/CAD down to the 1.3700 level for the first time since mid-October. However, with US markets closed for the Memorial Day long weekend, the bullish momentum for the Loonie was limited, and the CAD pulled back within last week’s range.
Looking ahead, Canadian GDP data expected later this week signals a sharp decline in annualized growth, as economists warn the Canadian economy may already be slipping into a recession.
Daily Digest Market Movers: Canadian Dollar Tests Gains Ahead of Key GDP Data
- Thin trading volumes during the holiday-thinned markets caused the Canadian Dollar (Loonie) to show some volatility on Monday, but its strength was limited by low market activity.
- US session flows remained subdued due to the extended Memorial Day weekend.
- Economists expect Canadian GDP to decline sharply from 2.6% in Q1 to around 1.6%, while the unemployment rate is also forecast to rise again.
- Meanwhile, US traders are focused on upcoming US GDP and inflation data, along with the Federal Reserve’s meeting minutes scheduled for Wednesday.
Canadian Dollar Price Forecast
Although USD/CAD briefly hit a seven-month low near 1.3700 early Monday, the pair retreated back into the midrange after facing technical resistance. The pair remains below the 200-day Exponential Moving Average (EMA) at approximately 1.4020. Despite the Loonie’s recent strength, technical indicators suggest USD/CAD is set for a potential rebound, with oscillators dropping sharply into oversold territory.
USD/CAD Daily Chart
