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The Canadian economy grew by 0.5% in January. This was in line with expectations and a undoubtedly a solid monthly growth rate. Nevertheless, USD/CAD just cannot break lower.

A growth rate of 0.5% per month is usually at the high end of Canadian growth figures. Growth rates of 0.2% or 0.3% are more common, yet it’s important to state that this was the market’s consensus.

But USD/CAD climbed. It already reached a low of .09683 a few hours before the release, but it went back up towards the event, and continued north afterwards. At the time of writing, the pair trades at 0.9715.

Why?

0.97 is a very strong support line. It has proved its strength once again. While we’ve already seen several dips below this line during March, all these dips were short lived. 0.97 was a strong support line also in 2008.

At current levels, 0.98 is the first line of resistance, followed by 0.9935. Further support below 0.97 is found at 0.96. See the Canadian dollar forecast for more.

Canada is quite unique in publishing Gross Domestic Product updates every month. While the release isn’t immediate, and published only two months after the reported month, the data is still more fresh than in other countries.

At the same time, Canada’s southern neighbor, the US, release its weekly jobless claims. They dropped from a revised 394K to 388K, falling short of expectations to hit 388K, but quite in line with expectations.

This was the last hint before tomorrow’s all important Non-Farm Payrolls, which always rock all currencies. This time, NFP doesn’t collide with the Canadian job numbers that are published one week later. So, USD/CAD will rock only on the American number.

See the Non-Farm Payrolls preview for more.