USD/CAD Trend:
A slowdown in Canada’s Gross Domestic Product (GDP) may heighten the bearish sentiment surrounding the Canadian dollar as it raises the Bank of Canada’s (BoC) scope to cut the benchmark interest rate later this year.
In light of the protracted recovery, Governor Stephen Poloz may take additional measures to encourage a ‘soft landing,’ and a material shift in the policy outlook may produce fresh highs in the USDCAD as the Federal Reserve remains poised to discuss another $10B taper in March.
The widening trade deficit along with the slack in private sector consumption may generate a dismal GDP report, and a material slowdown in the growth rate may trigger a bearish reaction in the Canadian dollar as it heighten bets for a BoC rate cut.
Nevertheless, the pickup in employment paired with the rise in business investments may help to produce a positive result, and better-than-expected GDP print may spur a short-term pullback in the USDCAD as market participants scale back bets for more monetary easing.
FOREX Updates Today:
The Canadian Dollar saw a bit of strength following the better than expected QoQ GDP print, but the USD/CAD pair remained supported by a key break and hold of former resistance at the July and September highs. The pair closed out the Thanksgiving weekend higher and has since continued to push higher on technical factors as well as fundamentals. Data out of Canada since December has been dismal to say the least, but as of late we have seen a slight correction to the downside. A poor GDP print here may help fuel momentum in the breakout.
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