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USD/CAD: Trading the Canadian GDP Sep 2011

The Gross Domestic Product (GDP) indicator measures the production and growth of the economy. Analysts consider GDP one of the most important economic indicators, thus the publication of the Canadian GDP can have an immediate effect on USD/CAD.

Here are all the details, and 5 possible outcomes for USD/CAD.

Published on Friday at 15:30 GMT.

Indicator Background

Canada releases GDP figures on a monthly basis, unlike many other countries which do so every quarter. Monthly readings provide investors and analysts with more data about the health and direction of the economy.

GDP had an impressive rally into positive territory, climbing from -0.3% in July to 0.2% in August. The forecast for September is a modest rise to 0.3%, signaling an upward trend for Q3.

Sentiments and levels

Canada’s economy is showing some positive indicators, such as recent GDP figures. However, the ongoing slowdown in the US and lower oil prices are hurting the vital export sector, and weighing on the loonie. Thus, the overall sentiment is bullish on USD/CDN towards this release.

Technical levels, from top to bottom: 1.03, 1.02, 1.0080, 1.00, 99.15 and 97.80.

5 Scenarios

  1. Within expectations: 0% to 0.6%: In this scenario, USD/CAD could show some slight fluctuation, but it is likely to remain within range,  without breaking any levels.
  2. Above expectations: 0.7% to 1%: A reading above expectations would be an indication  of growth in the Canadian economy,  and could  push the pair  below one  support level.
  3. Well above expectations: Above 1%: An unexpectedly sharp rise in GDP could propel USD/CDN downwards, and two levels of support  can be broken.
  4. Below expectations: -0.4% to -0.1%: A reading in negative territory could push USD/CAD upwards, with one resistance level at risk.
  5. Well below expectations: Below -0.4%: A poor GDP reading would hurt the loonie, and the  pair could break two  resistance levels or more.

For more on USD/CAD, see the  Canadian dollar forecast.

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.