USD/CAD: Trading the Canadian GDP Jun 2013

Canadian 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 12:30 GMT.

Indicator Background

The Canadian GDP is released monthly and provides an excellent indication of the health and direction of the economy. Traders should pay particular attention to this economic indicator and treat it as a market-mover.

The May release posted a modest 0.2% gain, but this was enough to edge out the estimate of 0.1%, and give a boost to the Canadian dollar. The estimate for the upcoming reading stands at 0.1%. Will the indicator meet or beat this forecast?

Sentiments and levels

The Canadian dollar was hit hard by a double blow last week. First, the US dollar was broadly stronger after the Fed announcement about QE. The loonie lost more ground after Canadian key releases missed their estimates. US data has been largely positive, and an unimpressive Canadian GDP could send the Canadian dollar lower. So, the overall sentiment is bullish on USD/CAD towards this release.

Technical levels, from top to bottom: 1.0705, 1.0652, 1.0523, 1.0446, 1.0340, and 1.0285.

5 Scenarios

1. 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.
2. Above expectations: 0.4% to 0.7%: An unexpected higher reading can send the pair well below one support line.
3. 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.
4. Below expectations: -0.5% to -0.2%:  A lower GDP figure than predicted could cause the pair to climb and break one level of resistance.
5. Well below expectations: Below -0.5%. 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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