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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 12:30 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.

GDP posted a strong 0.4% increase in February, its highest reading since March 2011. However, the market forecast  calls for  a more modest increase of 0.1%  this month. Will the indicator surprise the markets with another strong reading?

Sentiments and levels

The Saudi decision to  help ease oil prices is  weighing on the Canadian dollar. In addition, the growing fears of a housing bubble in Canada  may also  take their toll. On the other hand, the stronger US economy is good news for the Canadian economy, as Canada is very dependent on US demand. Thus, the overall sentiment is  bullish on USD/CAD towards this release.

Technical levels, from top to bottom: 1.0143, 1.0070, 1.00, 0.9950, 0.9870, 0.9830  and 0.9780.

5 Scenarios

  1. Within expectations:  -0.2% 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 0.9%: An  surge in the  GDP  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  could rise and break a second resistance level.

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