USD/CAD holds steady around 1.2700 mark, moves little post-Canadian GDP

• USD/CAD attracted some dip-buying near the 1.2655 area, though lacked follow-through.
• A softer tone around oil prices undermined the loonie and extended support to the major.
• Upbeat Canadian GDP print, the prevalent USD selling bias kept a lid on any further gains.

The USD/CAD pair managed to recover a major part of its intraday losses and climbed back to the 1.2700 mark during the early North American session.

The pair attracted some dip-buying near the 1.2655 area on Tuesday and for now, seems to have stalled its recent pullback from the vicinity of the 1.2800 round-figure mark. A softer tone around crude oil prices undermined the commodity-linked loonie, which, in turn, was seen as a key factor that acted as a tailwind for the USD/CAD pair.

This, to a larger extent, was offset by an upbeat Canadian GDP print, which showed that the economy expanded by 0.6% MoM in November. This marked a slight deceleration from the 0.8% growth recorded in October, though was better than consensus estimates pointing to a reading of 0.3% and extended some support to the Canadian dollar.

On the other hand, a further pullback in the US Treasury bond yields dragged the US dollar away from the 18-month high touched in the aftermath of a more hawkish FOMC last week. The prevalent USD selling bias held back traders from placing fresh bullish bets around the USD/CAD pair and kept a lid on any meaningful upside.

Moving ahead, traders now look forward to the release of the US economic docket, featuring the release of the ISM Manufacturing PMI. This, along with the US bond yields, should influence the USD. Apart from this, traders will take cues from oil price dynamics to grab some short-term opportunities around the USD/CAD pair.

Technical levels to watch