USD/CAD Bounces of Parity on Weak Canadian GDP
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USD/CAD Bounces of Parity on Weak Canadian GDP

The Canadian economy grew by only 0.1%, weaker than 0.2% that was expected and weaker than April’s growth rate of 0.3%. Canada is unique in publishing GDP data on a monthly basis.

The Canadian dollar, which was already close to parity with the greenback, retreated and is now struggling with resistance, which is quite close.

Despite the weak growth, the situation in Canada remains positive. Recent job reports showed that unemployment remains low. The Bank of Canada is talking about rate hikes in the future (not too close) while many other developed countries are considering more monetary stimulus.

The accompanying  Raw Materials Price Index fell by 4%, much lower than a fall of 1.5% that was expected. The  Industrial Product Price Index also released by Canada fell by 0.3%, worse than a rise of 0.6% that was predicted. These second tier figures also push the loonie lower.

Canadian dollar parity further away after weak GDP July 31 2012
Canadian dollar parity further away after weak GDP – Click image to enlarge

USD/CAD opened the week lower and gradually moved towards parity. It hovered above these levels in the hours before the publication, but then went back up. It is currently capped by the 1.0030 level. 1.066 is stronger resistance.

See more about the loonie in the Canadian dollar forecast.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.