The loonie has been one of the weakest currencies against the buck this week. The pair has been affected by everything from risk aversion flows to NAFTA concerns to capital outflows. But the underlying reason for its weakness is the market's appreciation of divergent monetary policies between the two neighbors. With the Fed clearly taking a more hawkish stance the interest rate differentials will begin to weigh on the pair as we move through the year.

That's why tomorrow's CAD GDP data could be of great interest to the market. The consensus view is for a decline to 0.1% versus 0.4% and if that numbers prints the pair could test the 1.2900 level in the aftermath of the release. Having now barely cleared the triple overhead resistance at the 1.2850 level USDCAD stands poised to test the key 1.3000 mark if the data does not go its way.