Key Support Level for USD/CAD Amid Strong Canadian GDP Growth

The Canadian economy has rebounded sharply at the start of the new year. In fact, industry-level GDP surpassed market expectations, rising by 0.5% in January. Moreover, there was a broad-based growth in all sectors, leading to new projections of a 0.3% increase in GDP in February.

Despite the positive news, the CAD has remained largely stable. This could be due to quarter-end rebalancing flows. However, the USD/CAD pair has shown a quick reversal from 1.38, suggesting that the data may have already been factored in by market participants.

TD Securities predicts that the USD/CAD pair will find support at 1.35. However, if the US data disappoints in the coming weeks, this level could be seriously tested. It should be noted that the pair is still trading at a moderate premium.

In conclusion, the Canadian economy has had a strong start to the year, and the positive trend is expected to continue. However, the USD/CAD pair remains vulnerable to changes in the US economic data.