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The economy of Canada grew by 0.2% in the month of June – the last of Q2 2012. Early expectations were for a gain of 0.1%. For the whole of Q2, the pace was 1.8% (annualized). This was also better than 1.6% that was expected. On the year over year level, the output in Q2 was 2.4% higher than in Q2 2011., exceeding expectations of 2.2%.

USD/CAD dipped under the important 0.99 line prior to the release and is now at around 0.9880. Support is found at 0.9840.

USD CAD Falling on Strong Canadian GDP August 31 2012
USD CAD Falling on Strong Canadian GDP – Click image to enlarge

All eyes remain on Jackson Hole, where Ben Bernanke will begin talking at 14:00 GMT.

Expectations have risen towards the event once again, as the dollar is weakening across the board. Earlier in the week, expectations became more caution. In the current situation, Bernanke can rock the boat both ways.

For USD/CAD, hints about QE3 could send USD/CAD below the all-important support line of 0.9840. A disappointment could send it to challenge 0.99 once again.

For more on the loonie, see the Canadian dollar forecast.