The Canadian Dollar (CAD) climbed 0.7% against the US Dollar on Friday, buoyed by stronger-than-expected GDP growth figures that reignited investor confidence. The upbeat economic data sent traders rushing to buy the Loonie, pushing it back within striking distance of its six-month highs and signaling renewed momentum for the currency.
The Canadian Dollar (CAD) pushed higher on Friday, boosted by stronger-than-anticipated first-quarter GDP data. The impressive economic performance gave the Loonie fresh upside momentum, especially as the US Dollar (USD) continued to struggle near multi-year lows amid persistent trade tensions linked to the Trump administration.
Canada’s economy expanded by 2.2% in Q1, beating analyst expectations and helping the CAD revisit recent highs against the Greenback. Still, the headline growth masked underlying concerns. Consumer spending showed signs of cooling, while the boost in GDP was largely driven by a jump in cross-border trade activity. Much of this was attributed to businesses either accelerating shipments or stockpiling in anticipation of potential disruptions from the Trump administration’s evolving global tariff policies.
GDP Beats Mask Deeper Economic Strains; Rate Cut Bets Fade
Canada’s Q1 GDP surged by 2.2%, handily beating expectations of a 1.7% rise and delivering a strong headline that energized the Canadian Dollar. However, the upbeat number conceals underlying economic fragilities. The previous quarter’s growth was quietly revised down to 2.1% from 2.6%, raising concerns about the reliability of future estimates. Meanwhile, consumer spending actually contracted during the quarter, overshadowed by a spike in exports and imports as businesses rushed to stockpile goods ahead of U.S. tariffs announced in April.
Adding to the mixed picture, employment data points to a widening jobless divide, particularly among younger Canadians, hinting at deepening labor market stress. Despite these cracks, the robust GDP print has cooled expectations for a Bank of Canada (BoC) rate cut. Rate markets now assign an 80% probability that the central bank will hold steady at its next policy meeting.
Technical Outlook: Canadian Dollar (USD/CAD) Faces Key Resistance at 0.73
In recent sessions, the Canadian Dollar (USD/CAD) has been consolidating above the $0.72 level, with $0.73 acting as a strong resistance zone. This week, the pair displayed a slightly bearish tone after being rejected at the $0.73 level, retreating toward the key support at $0.72.
For much of the week, the market remained under downward pressure. However, by Friday, renewed bullish sentiment emerged, propelling the pair back toward the critical $0.73 mark. As the week drew to a close, minor profit-taking occurred around this level—likely due to its psychological significance and traders’ recognition of it as a recurring resistance zone.
While momentum has picked up, the likelihood of a clean breakout above $0.73 remains uncertain. The resistance has held firm in previous sessions, and volume indicators continue to reflect low trading activity, suggesting a lack of strong conviction behind the move.
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