Canadian Dollar snaps six-day win streak as markets pare Loonie bets

• The Canadian Dollar lost ground against the US Dollar on Tuesday.
• Canadian GDP growth figures loom ahead later in the week.
• Investor confidence has rebounded following fresh tariff delays, bolstering the US dollar.

The Canadian Dollar (CAD) lost ground against the US Dollar (USD) on Tuesday, snapping a six-session winning streak for the Loonie and pushing USD/CAD back above 1.3750 as trade headlines dominate the market cycle. Canadian Gross Domestic Product (GDP) growth is due later this week, on Friday, and serves as this week's only noteworthy Canadian data point.

Canadian GDP is bearing the brunt of the trade war burden, with median market forecasts expecting a sharp decline in headline annual GDP growth during the first quarter. However, forecasts have consistently undershot Canadian GDP for the past five straight months as investor sentiment underestimates the Canadian economy. Canadian GDP will undoubtedly benefit from businesses front-loading industrial and warehouse orders during Q1 to get ahead of tariffs and trade taxes imposed by the Trump administration, which came after the quarterly cutoff period.

Daily digest market movers: Another tariff delay sparks investor sentiment, pushing the Greenback higher

• US President Donald Trump walked back his own threats of a new 50% tariff on European goods, delaying the imposition of the new import taxes until July 9.
• Canadian GDP numbers for Q1 are slated for Friday, and are expected to sink to 1.7% YoY from 2.6%.
• However, market forecasts of Canadian GDP have run under actual results for five straight months.
• The Canadian economy is weakening due to a multitude of factors, and nerves have been fraying, particularly in trade. However, investors should expect an uptick in wholesale purchasing and warehousing increases after businesses spent the first quarter stockpiling resources, which could support the spending portion of GDP.
• Key US inflation figures are also due on Friday, with the latest Personal Consumption Expenditure Price Index (PCE) inflation set to be published at the same time as Canadian GDP, promising a volatile Friday market window.

Canadian Dollar price forecast

Tuesday's bullish turnaround has clipped USD/CAD's six-day losing streak, pulling the pair away from a continued decline to the bottom range of a descending channel on the daily candlesticks. An extended bullish push will see the pair running into a hefty technical resistance zone between the 1.3900 handle and the 200-day Exponential Moving Average (EMA) near 1.4000.

USD/CAD daily chart