Canada’s is unique by providing GDP on a monthly basis, providing action for USD/CAD each time. This release is expected to cut the winning streak. Here’s an outlook for this event 5 possible outcomes for USD/CAD.
Indicator Background
While the releases are scheduled two months after the reported month ended, they still provide a good insight about the overall situation in Canada. The upcoming publication, scheduled for Friday, April 29th at 12:30 GMT, is for the month of February.
2011 started well in Canada – the economy grew by a strong 0.5%. This solid growth was expected. Nevertheless, it continues the strong trend that began in the two months that preceded it. December saw a growth rate of 0.5% (0.4% was expected) and November stood on 0.4% (0.2% was predicted).
The rises reflect the improvement in the US economy, which Canada depends on, as well as rising oil prices which Canada exports.
This rise is likely to end now, with no change in GDP in February. The stall will likely be temporary, but can still weigh on the Canadian dollar. This is due to the stall in the job market seen recently after a few good months of improvements.
Sentiment and Technical Levels
The anti-US dollar sentiment still controls the markets, and the rising prices of oil both push for a significant bearish sentiment on USD/CAD. Add the low expectations from this report, and you have a scenario in which the pair leans towards one direction on almost any outcome – down.
Technical levels of support and resistance, top to bottom: 1, 0.9977, 0.9930, 0.98, 0.9660, 0.96, 0.9510, 0.9416, 0.92, 0.9056.
5 Scenarios
- Within expectations: 0% to +0.1%: USD/CAD rocks and eventually drops, with a chance of breaking below support after some time.
- Below expectations: -0.3% to -0.1% – the pair shakes and might rise, but probably within range, not breaking higher.
- Well below expectations: -0.4% or worse – such a scenario will already weigh heavily on the loonie. USD/CAD will rise, and will likely break above resistance.
- Above expectations: +0.2 to +0.4%: This positive scenario will probably see the pair dig lower, breaking one support line and maybe challenging another one.
- Well above expectations: +0.5% or more: A continued and strong Canadian growth will likely see the pair make a sharp move lower, with multiple year records broken.
For more technical levels and events, see the Canadian dollar forecast.