• USD/CAD trims intraday gains after stronger-than-expected Canadian GDP data.
• Canada's economy grew 0.5% in April, while the advance estimate points to 0.1% growth in May.
• Fed rate-hike expectations and Middle East uncertainty continue to support the US Dollar.

USD/CAD trims its intraday gains on Tuesday as the Canadian Dollar (CAD) strengthens after the latest Canadian Gross Domestic Product (GDP) data surprised to the upside. At the time of writing, the pair trades around 1.4203 after hitting an intraday high of 1.4247.

Statistics Canada reported that the economy expanded 0.5% in April after contracting 0.1% in March, beating market expectations for a 0.4% increase.

The increase was driven by growth in both goods-producing and service-producing industries, with 14 of the 20 sectors posting gains in April.

Statistics Canada's advance estimate points to 0.1% GDP growth in May, suggesting the economy is stabilizing after contracting in the previous two quarters.

The upbeat GDP report follows stronger-than-expected inflation and labor market data released earlier this month. Canada's Consumer Price Index (CPI) accelerated to 3.2% YoY in May from 2.8% in April, while employment increased by 87.8K after declining by 17.7K in the previous month.

Against this backdrop, the Bank of Canada (BoC) could stick with its wait-and-see approach and leave interest rates unchanged until inflation shows signs of easing.

Meanwhile, a stronger US Dollar (USD) continues to limit deeper downside in USD/CAD, keeping the pair anchored near levels last seen in April 2025.

The Greenback remains supported by expectations that the Federal Reserve (Fed) will raise interest rates this year, with traders pricing in a 63% chance of a September rate hike, according to the CME FedWatch Tool.

Additional support comes from lingering uncertainty surrounding US-Iran negotiations, which is keeping geopolitical risks in play and safe-haven demand for the US Dollar (USD) intact.

Iran’s Foreign Ministry spokesperson Esmaeil Baghaei said talks with Qatari mediators on the interim US deal are likely on Wednesday in Doha. However, no direct US-Iran talks are planned despite the US envoy arriving in Doha on Tuesday.

On the data front, US JOLTS Job Openings rose to 7.594 million in May, above market expectations of 7.3 million and slightly higher than April’s revised 7.585 million.