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
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.
Canada’s economy expanded 0.3% in December, matching the forecast. Another gain of 0.3% is expected in the January report.
Sentiments and levels
In the US, the Fed has sent clear signals that it is projecting two more rate hikes this year, disappointing the markets. President Trump failed to pass a key health care bill last week and remains embroiled in scandals, which could lessen risk appetite and hurt the Canadian dollar. So, the overall sentiment is bullish on USD/CAD towards this release.
Technical levels, from top to bottom: 1.3551, 1.3457, 1.3351, 1.3212, 1.3124 and 1.3003
5 Scenarios
- 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.
- Above expectations: 0.7% to 1.1%. An unexpected higher reading could send the pair below one support line.
- Well above expectations: Above 1.1%. A surge by the indicator would likely push USD/CAD downwards, and a second support level might be broken as a result.
- Below expectations: -0.5% to -0.1%. A contraction in GDP could see the pair climb and break one level of resistance.
- Well below expectations: Below -0.5%. A strong contraction in economic growth 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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