Forex - USD/CAD erases gains after U.S., Canadian GDP data

Investing.com - The U.S. dollar erased gains against its Canadian counterpart on Friday, after the release of downbeat U.S. economic growth data, although an equally disappointing growth report from Canada was expected to limit the Canadian dollar’s gains.

USD/CAD pulled back from 1.3186, the session high, to hit 1/3092 during early U.S. trade data, declining 0.49%.

The pair was likely to find support at 1.3051, the low of July 22 and resistance at 1.3252, the high of July 27 and a four-month peak.

In an advance report, the Bureau of Economic Analysis said U.S. gross domestic product rose 1.2% in the second quarter, disappointing expectations for a 2.6% increase. The U.S. economy grew 0.8% in the first quarter, whose figure was revised from a previously estimated growth rate of 1.1%.

Employment costs rose 0.6% in the last quarter, in line with expectations.

Meanwhile, real consumer spending increased by 4.2% in the three months to June, after an upwardly revised 1.6% gain in the previous quarter.

The data came after the Fed left interest rates unchanged at the conclusion of its two-day policy meeting on Wednesday.

The U.S. central bank had presented a rather positive oultook by saying that “near-term risks to the economic outlook have diminished” and that the labor market has “strengthened”, fueling speculation over a possible rate hike before the end of the year.

Meanwhile, the Canadian dollar came under pressure after Statistics Canada said on Friday that the country’s GDP fell 0.6% in May, compared to expectations for a 0.4% slip and after a growth rate of 0.1% the previous month.

The commodity currency was also hit by a decline in oil prices to fresh three-month lows amid ongoing global supply glut concerns.

The loonie was lower against the euro, with EUR/CAD advancing 0.37% to 1.4627.

The euro found support after preliminary data showed that the euro zone’s consumer price index rose by an annualized rate of 0.2% in July, exceeding expectations for a 0.1% uptick and after a 0.1% gain the previous month.

Core CPI, which excludes food, energy, alcohol and tobacco, increased by 0.9% last month, year-on-year, in line with expectations.