USD/CAD: Trading the Canadian GDP Jun 2015

GDP is a measurement of the production and growth of the economy, and 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 Tuesday 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.

GDP has struggled,  posting just one gain in 2015.  The March reading saw a decline of 0.2%, well off the estimate of a 0.2% gain.  The markets are expecting better news from the April report, with an estimate of +0.1%.

Sentiments and levels

A rate hike by the Fed seems to be  a matter of timing, and  last week a Fed policymaker spoke  of one or even two rate hikes in 2015, so  the FOMC may  be slightly more hawkish than perceived, . If there are further hints about a rate hike, the greenback could jump higher. So, the overall sentiment is  bullish on USD/CAD towards this release.

Technical levels, from top to bottom: 1.2646, 1.2541, 1.2386, 1.2230, 1.2114, and 119.95.

5 Scenarios

1. 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.
2. Above expectations: 0.5% to 0.9%: An unexpected higher reading can send  the pair  below one support line.
3. Well above expectations: Above 0.9%: An  unexpected surge in the reading  could push  USD/CAD downwards, and a second support level might be broken as a result.
4. Below expectations: -0.7% to -0.3%:   A  weaker figure than predicted could cause the  pair to climb and break one level of resistance.
5. Well below expectations: Below -0.7%. A sharp contraction in the indicator could push USD/CAD  higher and break a second resistance level.

For more on the loonie, see the USD/CAD forecast.

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