Poor Canadian GDP data weakens the CAD slightly

Q1 GDP from Canada grows just 3.1% at an annualized rate against an expectation of 5.2% and against a previous growth rate of 6.7%. On the other hand, monthly GDP for March comes out better at 0.7% m/m against expectations of 0.5% m/m and against previous growth of 1.1% m/m. The estimate for April shows growth of 0.2% m/m. 

Data slightly worse on a quarterly basis and showing a possible further slowdown in Q2. On the other hand, the Canadian economy is benefiting from the wave of strong oil, which can also be seen on the course in recent weeks. USDCAD tested the support at 1.2650, but before that it was below the retracement of 61.8 of the last upward wave, which suggests the end of the current upward momentum. Additionally, on the pair we observe a potential head and shoulders pattern with the target at 1.24, i.e. the lows from the beginning of April. 

Source: xStation5