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The 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

The Canadian GDP is released  monthly and provides an excellent indication of the health and direction of the economy. Traders should pay particular attention to this economic indicator and treat it as a market-mover.

The January reading came in at -0.1%, the first contraction  in the indicator since July 2011. The market prediction for this month is a healthy 0.3% rise. Will the market rebound and climb into positive territory?

Sentiments and levels

Higher oil prices  are great for Canada’s  export sector, but  they can also hurt  the economic  recovery in the US, thus dragging down the Canadian economy as well. The loonie recently crossed the important parity level, but is having trouble staying above it. Thus, the overall sentiment is  neutral on USD/CAD towards this release.

Technical levels, from top to bottom: 1.0263, 1.02, 1.0143, 1.0070, 0.99, and 0.9780.

5 Scenarios

  1. Within expectations:  0% to 0.6%. In such a scenario, USD/CAD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 0.7% to 1.0%: An unexpected higher reading can send  the pair  well below one support line.
  3. Well above expectations: Above 1.1%: An  unexpected surge in the reading  would push  USD/CAD downwards, and a second support level might be broken as a result.
  4. Below expectations: -0.4% to -0.1%:   A lower GDP figure than predicted could cause the  pair to climb and break one level of resistance.
  5. Well below expectations:  Below -0.4%. In this scenario, USD/CAD will rise and could break a second resistance level.

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