Gross Domestic Product (GDP) is a measurement of the production and growth of the economy. Analysts consider GDP one the most important indicators of economic activity. A reading which is better than the market forecast is bullish for the Canadian dollar.
Here are all the details, and 5 possible outcomes for USD/CAD.
Published on Friday at 13:30 GMT.
Indicator Background
Unlike many other developed countries, Canada releases its GDP on a monthly basis, allowing analysts to track GDP on an ongoing basis. Traders should pay particular attention to this economic indicator and treat it as a market-mover.
The September reading came in at 0.3%, lower than the month before but still above the estimate of 0.2%. The markets were pleased with this figure and the Canadian dollar moved higher in response. The markets are anticipating a weaker release for October, with an estimate of a 0.1% gain. Will the indicator again beat the estimate?
Sentiments and levels
The Canadian dollar remains under strong pressure as USD/CAD knocks on the 1.06 line. US Unemployment Claims continue to look sharp and have given a boost to the greenback. Canadian retail sales and inflation numbers were not strong last week, as the Canadian economy continues to struggle. So, the overall sentiment is bullish on USD/CAD towards this release.
Technical levels, from top to bottom: 1.0853, 1.0723, 1.0660, 1.0523, 1.0446 and 1.0340.
5 Scenarios
- Within expectations: 0.0% to 0.4%. In such a scenario, USD/CAD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 0.5% to 0.8%: An unexpected higher reading can send the pair below one support line.
- Well above expectations: Above 0.8%: An unexpected surge in the reading would likely push USD/CAD downwards, and a second support level might be broken as a result.
- Below expectations: -0.4% to -0.1%: A contraction in GDP figure could hurt the loonie and the pair could climb and break one level of resistance.
- Well below expectations: Below -0.4%. In this scenario, USD/CAD will likely rise and could break a second resistance level.
For more on the loonie, see the USD/CAD..
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