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Canadian 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  Monday at 12:30 GMT.

Indicator Background

The Canadian GDP is released  monthly, unlike most other developed countries which  post GDP on a quarterly basis.  The key indicator provides an excellent indication of the health and direction of the economy. Traders should pay particular attention to  Canadian  GDP  and treat it as a market-mover.

GDP  disappointed the markets, dipping  to -0.5% in  January.  This marked the first decline since July. The markets are expecting a strong turnaround in the upcoming release, with the estimate standing at +0.5%.

Sentiments and levels

The Canadian dollar had a  very good  week, although the push came from strong US numbers. The Canadian economy hasn’t impressed in recent releases, and if key Canadian numbers don’t shine next week, USD/CAD could move rise back to the high levels we’ve seen recently. So, the overall sentiment is  bullish on USD/CAD towards this release.

Technical levels, from top to bottom: 1.1535, 1.1369, 1.0945, 1.1124, 1.1000, and 1.0853.

5 Scenarios

  1. Within expectations:  0.3% to 0.7%. In such a scenario, USD/CAD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 0.8% to 1.1%: An unexpected higher reading can send  the pair  below one support line.
  3. Well above expectations: Above 1.1%: An  unexpected surge in the reading  could push  USD/CAD downwards, and a second support level might be broken as a result.
  4. Below expectations: -0.1% to +0.2%:   A contraction in  economic growth  reading could cause the  pair to climb and break one level of resistance.
  5. Well below expectations:  Below -0.1%. A very weak reading would likely hurt the loonie and  USD/CAD could break above a second resistance level.

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

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