Where Is the CAD Now After the Canada GDP Report?

Today we had the GDP report from Canada, but it was overshadowed by the PCE inflation report from the US. The Canadian dollar edged higher against the US dollar early yesterday, supported by an increase in oil prices. However, the gains were limited ahead of key US inflation data and a local GDP report. The loonie traded around 1.37 as investors awaited the release of the U.S. personal consumption expenditures price index, the Federal Reserve’s preferred inflation measure, and April GDP data from Canada, and after both reports it is little changed.

Canada's April GDP

Economists were forecasting a 0.3% GDP growth for Canada and today’s number came right at 0.3%, meeting expectations. Aaron Hurd, senior portfolio manager in the currency group at State Street Global Advisors, noted that the data is unlikely to prevent further interest rate cuts from the Bank of Canada. He added, “The BoC has indicated that there is room for recovery while maintaining steady disinflation.”

Earlier this month, USD/CAD surged above a triangle pattern as the Bank of Canada (BOC) adopted a dovish stance while the Federal Reserve (FED) remained hawkish. However, the pair subsequently retraced 170 pips, dropping to 1.3622 yesterday, where sellers encountered support at the 100-day SMA (green). This level marked a support zone on the daily chart, bolstered by moving averages, leading to a recovery today.

USD/CAD Chart Daily – The 100 SMA Held the Decline

Yesterday’s daily candlestick ended with a doji, indicating a potential bullish reversal following the decline. This was confirmed by a significant bullish candlestick today, which lifted the price by 70 pips from its lows. The rise was also aided by a decline in Canada’s advance wholesale trade for May. Meanwhile, the lower-than-expected US new home sales figures had no impact on the USD.

Canada April GDP Report

  • April GDP Growth: Canada’s GDP grew by 0.3% in April, meeting expectations and improving from the prior month’s flat growth.
  • May Advance GDP: Preliminary data for May shows a 0.1% growth, down from 0.3% in the previous month.
  • Sector Contributions:
    • Services-producing industries increased by 0.3%.
    • Goods-producing industries also grew by 0.3%.
  • Sector Performance:
    • 15 out of 20 sectors saw growth in April.
    • Significant contributors included wholesale trade, mining, quarrying, oil and gas extraction, and manufacturing.
    • Retail trade, particularly food and beverage retailers and gasoline stations, rebounded from previous declines and were among the top growth drivers

Canada’s GDP grew by 0.3% in April, aligning with expectations and showing an improvement from the prior month’s flat growth. Preliminary data for May indicates a slower growth rate of 0.1%, down from 0.3% previously. In April, both services-producing and goods-producing industries experienced a 0.3% increase.

Out of 20 sectors, 15 saw growth during the month. The largest contributors to this growth were wholesale trade, mining, quarrying, oil and gas extraction, and manufacturing, all of which had recorded declines in the previous month. Retail trade also made a significant comeback after two consecutive monthly decreases. The rebound was led by food and beverage retailers and gasoline stations, which had faced declines in the preceding months.

USD/CAD Live Chart

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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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