USDCAD Stays in Range After Positive Canada GDP

The USD has largely driven price movements as the USDCAD pair continues to fluctuate within a range between mas, following its decline in August. Over the past month, it has been trading between key moving averages (MAs), which have acted as both support and resistance, even though they’ve occasionally been breached.

On the weekly chart, the 100 SMA is now at risk of breaking, which could push the pair toward the 1.33 level. Today’s GDP data highlighted economic concerns, weakening the Canadian dollar (CAD), particularly as the Bank of Canada (BoC) has shifted to a more dovish stance, reducing interest rates. The combination of soft economic data and the BoC’s cautious approach is likely to put additional pressure on the CAD in the near term. The Advanced GDP reading for August was soft indeed, but the July number came above expectations, showing a 0.2% growth. However, the lower US PCE Core inflation is keeping the situation balanced.

USD/CAD Chart Daily – MAs Still Confining the Price in Range

Canada July 2024 GDP Report: Key Highlights

• Monthly GDP Growth:

  • 0.2% growth in July, beating the expected 0.1%.
  • Prior month (June) recorded 0.0% growth (no change).

• Sectoral Growth:

  • Services-producing industries grew by 0.2%, driven by:
    • Retail trade
    • Public sector
    • Finance and insurance
  • Goods-producing industries rose 0.1%, with:
    • Utilities and manufacturing leading the gains.
  • 13 of 20 sectors expanded, although transportation, warehousing, and accommodation services were negatively affected by wildfires.

August 2024 Advanced Estimate:

• Flat growth is estimated, with no significant change in real GDP.
  • Manufacturing, transportation, and warehousing faced declines.
  • Growth in the public sector and oil and gas extraction balanced these losses.
  • The preliminary estimate for August will be revised in the final GDP report, due on October 31, 2024.

This steady growth in July, coupled with flat projections for August, indicates mixed economic conditions, with some sectors experiencing growth while others face challenges. The ongoing impact of wildfires and sector-specific weaknesses could influence future revisions.

USD/CAD Live Chart