Canadian monthly GDP overview
Friday's economic docket highlights the release of monthly Canadian GDP growth figures for May, scheduled to be published at 12:30 GMT by Statistics Canada. Following the previous month's sharp contraction of 11.6%, the report is expected to show that the Canadian economy expanded by 3.5% during the reported month.
How could it affect USD/CAD?
Ahead of the important release, the USD/CAD pair was seen consolidating the previous day's goodish positive move of over 100 pips from the 1.3330 region, or seven-week lows. Given that the recent price action has been exclusively driven by the USD price dynamics, the data is unlikely to be a major game-changer for the major, albeit might still produce some meaningful trading opportunities.
Against the backdrop of a modest uptick in crude oil prices, a stronger-than-expected rebound might be enough to provide a modest lift to the commodity-linked currency – the loonie. Conversely, a weaker reading is more likely to be offset by the prevalent bearish sentiment surrounding the USD and do little to provide any meaningful lift to the USD/CAD pair.
That said, some follow-through buying beyond the overnight swing high, around the 1.3460 region should assist the pair to reclaim the key 1.3500 psychological mark. On the flip side, weakness back below the 1.3400 mark, leading to a subsequent breakthrough the 1.3385-80 horizontal support might turn the pair vulnerable to slide back towards multi-week lows, around the 1.3330 area.
Key Notes
• Canada: GDP is expected to rebound by 3.9% in July – TDS
• USD/CAD consolidates in a range above 1.3400 mark, Canadian GDP in focus
• Global recession: Canada’s economy and dollar in focus
About monthly Canadian GDP
The Gross Domestic Product released by Statistics Canada is a measure of the total value of all goods and services produced by Canada. The GDP is considered a broad measure of Canadian economic activity and health. Generally speaking, a rising trend has a positive effect on the CAD, while a falling trend is seen as negative (or bearish) for the CAD.
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