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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 Thursday 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  close attention to  this indicator, as an unexpected reading can quickly affect the movement of USD/CAD.

GDP  edged  down  to 0.2% in  December, within expectations.  The markets are expecting a gain of 0.3% in the January report. Will the indicator match or beat this prediction?

Sentiments and levels

Janet Yellen sounded ultra-cautious about the Fed’s monetary policy on Tuesday, and risk currencies like the Canadian dollar responded with strong gains. The US dollar remains under pressure, and this trend could continue during the week. So, the overall sentiment is  bearish on USD/CAD towards this release.

Technical levels, from top to bottom: 1.3353, 1.3174, 1.3064, 1.29 and 1.2780.

5 Scenarios

  1. Within expectations:  0.0% 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 1.1%: An unexpected higher reading can send  the pair  below one support line.
  3. Well above expectations: Above 1.1%: An  unexpected surge  by the indicator  would likely push  USD/CAD downwards, and a second support level might be broken as a result.
  4. Below expectations: -0.5% to -0.1%:   A contraction in  economic growth  reading could cause the  pair to climb and break one level of resistance.
  5. Well below expectations:  Below -0.5%. 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.