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.
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.
Canadian GDP edged up to 0.3% in September, above the forecast of 0.1%. The indicator is expected to dip to 0.1% in the October report.
Sentiments and levels
The Canadian dollar piggybacked on stronger oil prices in early December, but the Fed rate hike has sent the Canadian currency lower. Economic sentiment remains high ahead of Donald Trump taking over in Washington, which could be bullish for the greenback. So, the overall sentiment is bullish on USD/CAD towards this release.
Technical levels, from top to bottom: 1.3648, 1.3551, 1.3433, 1.3351 and 1.3219
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.
Above expectations: 0.5% to 0.9%. An unexpected higher reading could send the pair below one support line.
Well above expectations: Above 0.9%. A surge by the indicator would likely push USD/CAD downwards, and a second support level might be broken as a result.
Below expectations: -0.7% to -0.3%. A weak reading could cause the pair to climb and break one level of resistance.
Well below expectations: Below -0.7%. A strong contraction in economic growth would likely hurt the loonie and USD/CAD could break above a second resistance level.