– Canada Growth Rate to Expand for Second Straight Quarter.
– Bank of Canada (BoC) Warns 4Q GDP Could Be ‘Slightly Stronger than Expected.’
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Trading a News: Canada Quarterly Gross Domestic Product (GDP)
With Canada’s enlargement rate projected to boost an annualized 2.0% in a final three-months of 2016, a slack in mercantile activity might fuel a near-term allege in a USD/CAD sell rate as it encourages a Bank of Canada (BoC) to tame seductiveness rate expectations.
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Why Is This Event Important:
Even yet a Bank of Canada (BoC) argues ‘growth in a fourth entertain of 2016 might have been somewhat stronger than expected,’ Governor Stephen Poloz and Co. seem to be in no rush to lift a benchmark seductiveness rate from a record-low as ‘the Bank’s 3 measures of core inflation, taken together, continue to indicate to element additional ability in a economy.’ With that said, a diverging paths for financial process might continue to teach a long-term bullish opinion for USD/CAD generally as Fed Fund Futures now uncover a incomparable than 60% luck for a Mar rate-hike.
Expectations: Bullish Argument/Scenario
Improved certainty accompanied by a ongoing alleviation in a labor marketplace might beget another better-than-expected GDP report, and a certain enlargement might lean a BoC to dump a dovish tinge over a entrance months as signs of stronger enlargement boosts a opinion for inflation.
Risk: Bearish Argument/Scenario
Nevertheless, rising submit costs interconnected with a slack in private-sector expenditure might drag on a enlargement rate, and a gloomy GDP imitation might moderate a seductiveness of a Canadian dollar as it puts vigour on Governor Poloz to serve support a genuine economy.
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How To Trade This Event Risk(Video)
Bullish CAD Trade: Canada GDP Report Continues to Beat Market Expectations
- Need to see red, five-minute candle following a recover to cruise a brief trade on USD/CAD.
- If marketplace greeting favors a bullish Canadian dollar trade, sell USD/CAD with dual apart position.
- Set stop during a near-by pitch high/reasonable stretch from entry; demeanour for during slightest 1:1 risk-to-reward.
- Move stop to entrance on remaining position once initial aim is hit; set reasonable limit.
Bearish CAD Trade: Growth Rate Expands Less Than 2.0% per Annum
- Need green, five-minute candle to preference a prolonged USD/CAD trade.
- Implement same setup as a bullish Canadian dollar trade, only in a conflicting direction.
Potential Price Targets For The Release
Chart – Created Using Trading View
- USD/CAD stands during risk of fluctuating a miscarry from a Fibonacci overlie around 1.2980 (61.8% retracement) to 1.3020 (50% expansion) as it clears a near-term range, with a Relative Strength Index (RSI) highlighting a identical energetic and breaks out of a holding pattern; need a break/close above 1.3360 (38.2% retracement) to open adult a subsequent topside area of seductiveness around 1.3450 (23.6% retracement) to 1.3460 (61.8% retracement).
- Interim Resistance: 1.3630 (38.2% retracement) to 1.3660 (78.6% expansion)
- Interim Support: 1.2980 (61.8% retracement) to 1.3020 (50% expansion)
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Impact that Canada’s GDP news has had on USD/CAD during a prior quarter
3Q 2016 Canada Gross Domestic Product (GDP)
Chart – Created Using Trading View
Canada equivocate a technical retrogression in 2016, with a enlargement rate expanding an annualized 3.5% following a revised 1.3% constrictive during a three-months by June. The miscarry in mercantile activity was incomparable driven by a pickup in net-exports, with domicile expenditure advancing 2.6% during a same period, while private-sector spending narrowed 1.3% followed a 5.3% enlargement in a second-quarter. The marketplace greeting to a GDP news was short-lived, with USD/CAD bouncing behind from 1.3359 to finish a day during 1.3437.
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— Written by David Song, Currency Analyst
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