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.
Update: Canadian GDP rises 0.3% – USD/CAD falls
Here are all the details, and 5 possible outcomes for USD/CAD.
Published on Tuesday at 13:30 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 has been losing ground in recent readings, and the November report came in at -0.2%, close to the estimate of -0.1%. The markets are expecting a gain of 0.1% in the December release. If the indicator fails to break into positive territory, we could see the Canadian dollar lose ground.
Sentiments and levels
Canadian growth continues to lag behind its southern neighbor, and this could be underscored by weak GDP and inflation data this week. In the US, Fed chair Yellen tried to dampen expectations about a mid-rate hike in her Congressional testimony, but a strong NFP could boost the June rate expectations. So, the overall sentiment is bullish on USD/CAD towards this release.
Technical levels, from top to bottom: 1.2924, 1.2711, 1.2541, 1.2387, 1.2230, and 1.2114.
5 Scenarios
- Within expectations: -0.2% 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 0.9%: An unexpected higher reading can send the pair below one support line.
- Well above expectations: Above 0.9%: An unexpected surge in the reading would push USD/CAD downwards, and a second support level might be broken as a result.
- Below expectations: -0.7% to -0.3%: A contraction in economic growth reading could cause the pair to climb and break one resistance line.
- Well below expectations: Below -0.7%. A very weak reading would likely hurt the loonie and USD/CAD could break above a second resistance line.
For more on the loonie, see the USD/CAD..
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