Canadian GDP Data and the USD/CAD Reaction

0
107

Canada’s economy grew 0.1% in March and 0.3% in Q1. Annualized GDP came in at 1.2% in March.

This data was underwhelming. You can see the growth trend flattened since accelerating in 2009.

can gdp 5/30
(source: Statcan)

This data, while not a big surprise, did pressure the Canadian Dollar.

USD/CAD was edging lower before the GDP release, but rallied immediately after the data became available to the public.

USD/CAD 1H Chart
usdcad 1h chart 5/30

Falling trendline:
This week’s price action has been choppy but bearish, retreating from last week’s high of 1.0941 down to 1.0822 before the GDP reaction. If the GDP reaction does not extend above the current falling trendline seen in the 1H chart, look for traders to fade USD/CAD further to end the session, or begin the Monday session.

A break above the trendline neutralize this week’s bearish market, but a break above 1.0885-90 area will be needed to open up a bullish outlook in the 1H chart, which would at least bring the 1.0941 resistance in sight.

usdcad 0530 daily chart

Technical Levels:
Looking at the daily chart, you see that a break above 1.0941 opens up 1.1053.

However, if price breaks below 1.0810, we have the 1.0737-50 area as a near-term target. Below that the 1.0585-1.06 area comes into play.

Non-Direction:
Because USD/CAD is at the crossroad between a 2013 rally, and a 2014 consolidation that is turning bearish, we should look at USD/CAD without directional bias. Note that price is trapped between the 200-,100-,50-day moving averages, another sign of non-direction.

In this environment, let’s limit the bullish outlook to 1.0941 and 1.1053. The bearish outlook will have a big challenge in the 1.0735-50 area.

To contact the reporter of this story, email Fan Yang at fan@forexminute.com
Earlier: Silver Trader at New Low on the Year and Key Support

 

SHARE
Previous articleArgentina Central Bank Issues Warning Against Bitcoin
Next articleEUR/USD Trading Between 1.36 and the 200-Day SMA
Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.