USD/CAD eases from highs after Canadian GDP data, floats above 1.35

• Canadian GDP expanded by 0.5% on a monthly basis in March.
• PCE inflation in the U.S. stays below Fed's target.
• WTI extends slide, trades a little above $55.

With crude oil prices suffering heavy losses amid flight-to-safety, the commodity-sensitive loonie struggled to find demand and allowed the USD/CAD pair to advance to its highest level since the last week of December at 1.3565. However, with the Canadian GDP data helping the CAD gather strength, the pair reversed its direction and erased a large part of its daily gains. As of writing, the pair was up 0.12% on the day at 1.3515. For the week, the pair is currently up more than 80 pips.

Statistics Canada today announced that following the 0.2% contraction recorded in February, the real GDP in Canada expanded by 0.5% on a monthly basis in March to surpass the market expectation of 0.3%. Other data from Canada revealed that the Raw Material Price Index and the Industrial Price Index rose more than expected in April to provide additional support to the CAD.

On the other hand, the U.S. Bureau of Economic Analysis reported that the core Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred gauge of inflation, came in at 1.6% in April to match the market expectation.  Fİnally, the UoM' Consumer Confidence Index dropped to 100 from 102.4 in the previous estimate to reflect the negative impact of Trump administration's trade policy on the consumer sentiment.

"The late-month decline was due to unfavorable references to tariffs, spontaneously mentioned by 35% of all consumers in the last two weeks of May, up from 16% in the first half of May and 15% in April and equal to the peak recorded last July in response to the initial imposition of tariffs," the UoM said in its press release.

Meanwhile, the barrel of West Texas Intermediate is losing 1.7% on a daily basis and trading a little above the $55 mark, making it difficult for the CAD to gather further strength.

Technical levels to consider