When is the Canadian GDP report and how could it affect USD/CAD?

Canadian GDP overview

Tuesday's economic docket highlights the release of monthly Canadian GDP growth figures for June, scheduled to be published at 12:30 GMT. Statistics Canada will also release the quarterly growth figures, making this event more significant than the ones including only monthly data. Consensus estimates suggest that the economy expanded by 0.7% during the reported month and 2.5% annualized pace during the second quarter of 2021. This would mark a sharp deceleration from the 5.6% rise recorded in the previous quarter. Nevertheless, the numbers will provide a fresh insight into how the economy performed coming out of the spring lockdowns.

How could it affect USD/CAD?

A stronger than expected report will stoke confidence in the country’s resilience to the containment measures. This, along with the recent bullish run in crude oil prices, should underpin the commodity-linked loonie and exert fresh downward pressure on the USD/CAD pair.

Conversely, a softer reading is more likely to be offset by the prevalent selling bias surrounding the US dollar, which continues to be weighed down by fading hopes for an earlier Fed lift-off. This, in turn, suggests that the path of least resistance for the major is to the downside.

From current levels, immediate support is pegged near the very important 200-day SMA, currently around the 1.2540 region. Some follow-through selling would accelerate the fall and drag the USD/CAD pair further towards challenging the key 1.2500 psychological mark.

On the flip side, the 1.2625-35 region now seems to have emerged as immediate strong resistance. A sustained strength beyond should allow bulls to aim back to reclaim the 1.2700 mark. Acceptance above the mentioned handle might prompt some short-covering move around the major.

Key Notes

  •  USD/CAD Weekly Forecast: Oil prices and US rate policy undermine outlook

  •  USD/CAD Outlook: Bears challenge ascending trend-line, Canadian GDP in focus

  •  USD/CAD hangs near two-week lows, below 1.2600 mark ahead of Canadian GDP

About the 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.