USD/CAD hangs near 4-week lows, below 1.25 mark as focus shift to US jobs data

The USD/CAD pair extended previous session's sharp slide from two-week tops and drifted back closer to 4-week lows touched earlier this week.

The pair on Thursday came under some intense selling pressure and tumbled nearly 200-pips from levels beyond mid-1.2600s following the release of strong Canadian economic growth report. Official data showed that Canadian GDP increased 0.3% m-o-m in June, with the quarterly growth recording a solid rise of 4.5% in the second quarter. 

   •  Canada: Growth jumps even higher in Q2 – RBC Economics

This coupled with mixed US economic data, which stalled the strong US Dollar bullish move seen over the past two-days, further collaborated to the pair's weakness back below the key 1.25 psychological mark. Thursday's core PCE price index showed that the pace of inflation remains subdued and might have dented expectations of any additional Fed rate hike action by the end of this year. 

   •  Fed: Inflation headache intensifies as core PCE hits low - ING

With investors looking past yesterday's macro data, a modest pickup in the USD demand coupled with a pullback in crude oil prices, which tends to weigh on the commodity-linked currency - Loonie, helped limit further losses, at least for the time being.

Investors' focus on Friday will remain glued to the keenly watched US monthly jobs report (NFP), which should drive the greenback in the near-term and eventually determine the next leg of directional move for the major. 

   •  Watching wages for signs of inflation - Wells Fargo

Technical levels to watch

Bears would be eyeing for a break through 4-week lows support near 1.2440 level, below which the pair is likely to challenge the 1.2400 handle before heading towards its next major support near the 1.2360-55 region.

On the upside, any recovery attempts might now confront some fresh supply near the 1.25 handle, which if cleared could trigger a short-covering rally back towards 1.2560-65 horizontal resistance en-route the 1.2600 round figure mark.