CAN GDP Flat in July
After 6 consecutive months of growth, Canada’s GDP remained unchanged in July, with a print of 0.0%. the reading in June was a 0.3% growth, and forecasts for July averaged around 0.2%.
Manufacturing Keeps GDP Afloat
There were growth seen in manufacturing and the public sector, but decreases in mining, oil and gas extraction and utilities, agriculture, wholesale trade, transportation, and warehousing service, arts, entertainment and recreation were all down.
Okay, so at least there was no contraction, and possibly even a slight growth that was too insignificant to print. Still, traders do see this as a disappointing growth reading, though it should be emphasized that the growth in manufacturing does underpin a sustained recovery.
USD in Bullish Continuation:
In the short-term however, CAD continues to be pressured. The USD/CAD for example, cleared above the 1.1180 high on the week after the soft GDP data.
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As we can see in the 1H chart, USD/CAD was already bullish. The 200-, 100-, and 50-hour simple moving average was sloping up, in bullish alignment, and spreading apart. Price has held above them, and bounced off the 50-hour SMA at the time of the GDP release. The 1H RSI has held above 40 while being able to tag 70, showing persistent bullish momentum.
(click to enlarge)
The break above 1.1180 gives USD/CAD a bullish continuation signal. The daily chart also shows a bullish market. Although the moving averages are not exactly in bullish alignment, price has bounced off them in a bullish slingshot signal in August and September. The daily RSI has held above 40 since tagging 70 showing maintenance of the bullish momentum. Today’s bullish breakout on soft Canadian GDP data is paving the way toward the 2014-high at 1.1278.
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