USD/CAD: Trading the Canadian GDP Nov 2013

Gross Domestic Product (GDP) is a measurement of the production and growth of the economy. Analysts consider GDP one the most important indicators of economic activity. A reading which is better than the market forecast is bullish for the Canadian dollar.

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

Published on Friday at 13:30 GMT.

Indicator Background

Unlike many other developed countries, Canada releases its  GDP on a monthly basis, allowing analysts to track GDP on an ongoing basis. Traders should pay particular attention to this economic indicator and treat it as a market-mover.

The September reading came in at 0.3%, lower than the month before but still above the estimate of 0.2%. The markets were pleased with this figure and the Canadian dollar moved higher in response. The markets are anticipating a weaker release for October, with an estimate of a 0.1% gain. Will the indicator again beat the estimate?

Sentiments and levels

The Canadian dollar remains under strong pressure as USD/CAD  knocks on the 1.06 line. US Unemployment Claims continue to look sharp and have given a boost to the greenback.  Canadian retail  sales and inflation numbers were not strong  last week, as the Canadian economy continues to struggle. So, the overall sentiment is  bullish on USD/CAD towards this release.

Technical levels, from top to bottom: 1.0853, 1.0723, 1.0660, 1.0523, 1.0446 and 1.0340.

5 Scenarios

1. Within expectations:  0.0% to 0.4%. In such a scenario, USD/CAD is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 0.5% to 0.8%: An unexpected higher reading can send  the pair  below one support line.
3. Well above expectations: Above 0.8%: An  unexpected surge in the reading  would likely push  USD/CAD downwards, and a second support level might be broken as a result.
4. Below expectations: -0.4% to -0.1%:   A  contraction in GDP figure  could hurt the loonie and the pair  could climb and break one level of resistance.
5. Well below expectations:  Below -0.4%. In this scenario, USD/CAD will likely rise and could break a second resistance level.

For more on the loonie, see the USD/CAD forecast.

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