• The Canadian economy unexpectedly contracted during the second quarter.
• The Loonie tumbles across the board after Canadian GDP data.
• USD/CAD jumps towards 1.3550 despite broad-based Greenback weakness after NFP.

The USD/CAD broke above 1.3520 and surged to 1.3556, approaching Thursday's highs, following the release of the US employment and Canadian Q2 reports.

Canada's real Gross Domestic Product (GDP) unexpectedly contracted at an annual rate of 0.2% in the second quarter, against expectations of a 1.2% expansion. Growth figures from the first quarter were revised lower, from a 3.1% expansion to 2.6%.

The disappointing data weighed on the Loonie, which weakened across the board after the release. Next week, the Bank of Canada (BoC) is set to meet, and no change in policy is expected, especially considering the growth figures. The upside move in USD/CAD was limited due to some weakness in the US dollar following the official US employment report.

Nonfarm Payrolls expanded by 187,000 in July, surpassing the market's expectation of 170,000. The Unemployment Rate rose from 3.5% to 3.8%. Average Hourly Earnings increased 4.3% from a year ago, below the expected 4.45%. The US Dollar Index dropped to 103.25, hitting a fresh daily low, but later trimmed losses to rise to 103.50.

Holding above the 20-day SMA

Early on Friday, USD/CAD bottomed at 1.3489, the lowest level since August 16. It then rebounded moderately, gaining upside momentum after the data.

The pair is currently rising after falling for four consecutive days and is holding above the 20-day Simple Moving Average (SMA) that stands at 1.3515.

On the weekly chart, USD/CAD is still down and is on track to post its first weekly decline after six consecutive weeks of gains.

Technical levels