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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 Tuesday 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 as an unexpected reading could affect the direction of USD/CAD.

GDP  has been in positive territory for most of 2012, and posted an increase of 0.3% in June. The market estimate for the July reading is for a slight drop, to 0.2%.

Sentiments and levels

Continuing weak US data continues  to  concern the markets, and could  hurt the US dollar. As well,  remarks by ECB head Mario  Draghi to take “all measures” to preserve the euro  has helped the loonie.  Thus, the overall sentiment is  bearish on USD/CAD towards this release.

Technical levels, from top to bottom: 1.02, 1.0150, 1.0066, 1.00, 0.9950, and 0.99.

5 Scenarios

  1. Within expectations:  -0.1% to 0.5%. In such a scenario, USD/CAD is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 0.6% to 0.9%: An unexpected higher reading can send  the pair below one support line.
  3. Well above expectations: Above 0.8%: A surge in the reading  would push  USD/CAD downwards, and a second support level might be broken as a result.
  4. Below expectations: -0.5% to -0.2%:   A lower GDP figure than predicted could cause the  pair to climb and break one level of resistance.
  5. Well below expectations:  Below -0.5%. In this scenario, USD/CAD could rise and could break a second resistance level.

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