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The Canadian economy grew by 0.5% in January, more than expected. Canada was expected to report GDP growth of 0.4% in January, the first month of 2014. Year over year, Canada grew by 2.5%. It reported a squeeze of 0.5% in December, but a positive 2013.

USD/CAD was falling towards the publication, trading at 1.1025, extending gains seen in the previous week. The pair now extends the drops and already reached a low of 1.1010.

Update: the pair made another move lower and bottomed out at 1.1001 – just one pip from the all important round number, which clearly serves as support. Below this level, 1.09 is the next support. Resistance is at 1.1070. For more levels, see the USDCAD forecast.

One of the positive components in the GDP report is the average weekly earnings: it rose at an annual pace of 3%, higher than 2.4% reported beforehand. Inflation in salaries is core inflation that the central bank watches.

The weakness of the Canadian dollar may be playing a part in the economic strength. And now the pendulum swings to the other direction.