Buying the Retreat in USD/CAD After Canadian GDP Figures
USD/CAD has been bearish since the middle of December, after buyers failed to hold gains above 1.37. It touched 1.33 late last week, but that one held as support and yesterday we saw a bullish reversal, ahead of today’s GDP report from Canada and the FOMC meeting, which is expected to produce a 25 basis points rate hike.
USD/CAD moved above 1.3470 as risk sentiment turned negative, but today we saw a reversal ahead of the economic data from North America, which escalated after the release. The US data missed expectations, with wages coming at 1.0% in Q4 vs 1.3% in Q3, while benefits also missed at 0.8% vs 1.0% in Q3. The Canadian GDP on the other hand posted a 0.1% increase, which helped in the USD/CAD retreat. We decided to open a buy signal, so let’s see how it goes.
Canada November GDP Report
- November GDP MoM +0.1% vs +0.1% expected
- Statistics Canada estimated the November report was ‘essentially unchanged’ in last month’s report
- October GDP was +0.1%
- Goods trade added -0.1% vs -0.7% prior
- Services added +0.2% vs +0.3% prior
- 14 of 20 industrial sectors increased
- Advanced December GDP “essentially unchanged”
- Advance Dec GDP implies +0.4% q/q growth and +3.8% y/y growth
- Full report
Growth has nearly stalled in Canada and the Bank of Canada expects it to be flat in H1 before picking up in the second half of the year. The 3.8% yearly growth compares to 2.1% in the US but the strength is due to a later reopening from covid controls. In 2021, Canada grew 4.6% compared to 5.9% in the US. The Canadian dollar is higher after this report but that’s because it was released at the same time as a benign US wage report and the US dollar is broadly softer. USD/CAD was last at 1.3424.
USD/CAD Live Chart
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