USD/CAD approaches 25-month lows as loonie strengthens with oil

The USD/CAD pair, which was already under pressure after Canada released a robust GDP growth in May, continues to push lower in the session and moves closer to the 25-month low of 1.2412 that was set on Wednesday. As of writing, the pair was trading at 1.2425, losing 1.03%, or 125 pips, on the day.

• Canada: Real GDP grew 0.6% in May, as 14 of 20 industrial sectors increased

In addition to the Canadian GDP data, the commodity-sensitive loonie is receiving an additional boost from the crude oil rally, which lifted the barrel of West Texas Intermediate to its 2-month peak at $49.77 in the last hour. At the moment, the barrel of WTI is trading at $49.70, gaining 1.3%.

• Oil: WTI hits 8-week highs near $50

On the other hand, even after today's data from the U.S. showed that the preliminary Q2 GDP growth advanced to 2.6% from 1.2% in the first quarter, the greenback struggled to find demand from investors. The weak personal consumption expenditure prices  (0.3% vs. 1.2% expectation) suggested that the FOMC could stay on a more neutral path rather than accelerating the pace of tightening and dragged the US Dollar Index to a fresh daily low at 93.15. If the index remains around that level at the end of the day, it is going to record its lowest weekly close in more than 15 months.

• US: PCE price index increased 0.3 percent in second quarter

Now with today's data out of the way, investors will look upon Minneapolis Fed President Neel Kashkari's speech at 17:20 GMT for fresh catalysts.

Technical outlook

A weekly close below 1.2410 (Jul. 26 low/25-month low) could open the door for further losses towards 1.2365 (Jun. 2, 2015, low) and 1.2300 (psychological level). On the flip side, resistances could be seen at 1.2500 (psychological level), 1.2565 (daily high/10-DMA) and 1.2665 (20-DMA).