Canadian GDP is a measurement of the production and growth of the economy. Analysts consider GDP one the most important indicators of economic activity, and 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 12:30 GMT.
Indicator Background
The Canadian GDP is released monthly, unlike most other developed countries which post GDP on a quarterly basis. The key indicator provides an excellent indication of the health and direction of the economy. Traders should pay particular attention to Canadian GDP and treat it as a market-mover.
GDP softened in March, dropping to just 0.2%, compared to 0.5% a month earlier. However, this reading did match the forecast. The markets are expecting another weak release, with the estimate standing at just 0.1%.
Sentiments and levels
US numbers have been relatively strong despite some blips, and the Fed’s continuing tapers to QE marks a vote of confidence in the economy. Canadian numbers have been lukewarm and weak inflation continues to weigh on the economy. The Canadian dollar could soften if GDP and other key numbers do not meet expectations. Thus, the overall sentiment is bullish on USD/CAD towards this release.
Technical levels, from top to bottom: 1.1124, 1.10, 1.0945, 1.0853, 1.0723, and 1.0660.
5 Scenarios
- Within expectations: -0.1% to +0.3%. In such a scenario, USD/CAD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 0.4% to 0.7%: An unexpected higher reading can send the pair below one support line.
- Well above expectations: Above 0.7%: An unexpected surge in the reading would push USD/CAD downwards, and a second support level might be broken as a result.
- Below expectations: -0.5% to -0.2%: A weak reading could cause the pair to climb and break one level of resistance.
- Well below expectations: Below -0.5%. In this scenario, USD/CAD could break a second resistance level.
For more on the loonie, see the USD/CAD..
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