Canadian GDP In, USD/CAD Headed South
Shain Vernier • 1 min read
It has been a big Friday for the Canadian economy, with positive sentiment flowing toward the Loonie. Rising crude oil prices and a positive Canadian GDP report have the USD/CAD firmly on the bear just beneath the 1.3200 handle.
During the pre-Wall Street open, Canadian GDP and several other key metrics were released. Here is a look at the data:
Event Actual Projected
Canada GDP (MoM, April) 0.1% 0.0%
Canadian Industrial Product Price (MoM, May) 1.0% 0.9%
Canada Raw Material Price Index (May) 3.8% 1.2%
U.S. Core Personal Consumption (MoM, May) 2.0% 1.9%
Even the strong U.S. Core Personal Consumption report cannot stop the USD’s bleeding against the CAD. Canadian GDP came in above expectations, as did the price indices. It appears that the Bank of Canada (BoC) may be in a position to adjust their outlook for the CAD in the near future.
In a trade recommendation from yesterday, I outlined a long trading plan for the USD/CAD. The position performed well, producing a 40+ pip positive move. As of now, buyers and sellers are fighting it out in the vicinity of 1.3200.
Overview: From a fundamental standpoint, the crude oil rally is driving the USD/CAD. August WTI futures are trading above $74.00 and look poised to test $75.00 in the near future. This is good news for Canada’s energy sector and the economy as a whole.
For the time being, I am in wait-and-see mode toward the Loonie. While the bears are in control of today’s session, the 1.3219-1.3175 area is a key for this market moving forward. If we see a sub-1.3200 close, then a further plunge is likely. If this level holds up, the intermediate-term bullish trend will remain technically valid.