Forex - USD/CAD pares gains after Canadian GDP data

Forexpros – The U.S. dollar pared gains against its Canadian counterpart on Monday, following the release of data showing that Canada’s economy grew more-than-expected in August.

USD/CAD pulled back from 1.0028, the pair’s highest since Thursday, to hit 0.9977 during early U.S. trade, still up 0.60% over the day.

The pair was likely to find support at 0.9890, Thursday’s low and a five-week low and resistance at 1.0049.

Statistics Canada said gross domestic product grew at an annualized rate of 2.4% in August, outstripping expectations for a 2.2% increase. The previous month’s figure was revised up to a 2.4% gain from a previously reported 2.3%.

The increase came as the energy sector posted the largest gain in eight months and output in the finance sector expanded the most since the onset of the global financial crisis in October 2008.

The U.S. dollar rallied against all of its major counterparts earlier, after Japanese officials launched an intervention to curb the appreciation of the yen after the dollar fell to a record low of JPY75.56 in early Asian trade.

But the broadly stronger dollar weighed on crude oil prices, with the December crude contract on the New York Mercantile Exchange tumbling 1.73% to trade at a two-day low of USD91.69 a barrel.

Raw materials, including oil account for about half of Canada’s export revenue.

Meanwhile, the Canadian dollar was sharply higher against the yen, with CAD/JPY jumping 2.32% to hit 78.17.

Also Monday, industry data showed that manufacturing activity in the Chicago area fell more-than-expected in October, falling to 58.4 from 60.4 the previous month. Analysts had expected the index to decline by 1.4 points to 59.0 in October.