USD/CAD clings to modest gains near 1.3100 after Canada GDP data

• USD/CAD touched its highest level since mid-July above 1.3100.
• Canadian economy expanded at a softer pace than expected in Q2.
• Greenback struggles to gather strength after weak employment data.

The USD/CAD pair gathered bullish momentum and touched its highest level since mid-July at 1.3132 before erasing a portion of its daily gains. As of writing, the pair was up 0.1% on the day at 1.3107.

Canadian economy loses momentum

The data from Canada showed on Wednesday that the economy expanded at an annualized rate of 3.3% in the second quarter. This reading came in weaker than the market expectation for a growth of 4.4% and caused the loonie to lose interest. 

On the other hand, the ADP reported that employment in the US private sector rose by 132,000 in August, missing the market expectation for an increase of 288,000 by a wide margin. This data caused the US Dollar Index (DXY) to lose its traction and made it difficult for USD/CAD to preserve its bullish momentum. Ahead of Wall Street's opening bell, DXY stays flat on the day at around 108.90.

Meanwhile, crude oil prices started to rebound, helping the commodity-related CAD show some resilience against its rivals. The barrel of West Texas Intermediate, which dropped to a nine-day low of $88.20 earlier in the day, was last seen trading above $90.

There won't be any other high-tier macroeconomic data releases in the remainder of the session but month-end flows toward the London fix could ramp up the market volatility.

Technical levels to consider