Taking a look at the breakdown of the report, business investment was the largest contributor to growth, while final domestic demand added 3.6 percent. Meanwhile, expenditures on non-durable goods and services increased 3.9 percent and 4.8 percent respectively, while machinery and equipment jumped 29.7 percent. Today’s report may ease pressure for the central bank to raise borrowing costs at its rate decision on September 8th. As of late traders are pricing in a sixty four percent chance that the BoC will raise its key overnight lending rate twenty five basis points, according to the Credit Suisse overnight index swaps. As indicated by today’s report, economic activity in Canada will likely be moderate as the region’s largest trading partner, the U.S. faces major headwinds in the coming months.
Canada’s GDP
Source: Bloomberg
USD/CAD Daily Chart
Source: FXCM’s Strategy Trader – Prepared by Michael Wright
After testing the 38.2 percent Fibonacci retracement, the pair ahs reversed course, and now looks poised to test 1.0700. At the same time, with the recent break above the descending channel and our speculative sentiment at -1.180, I do not rule out further gains in the pair.
Written by Michael Wright, Currency Analyst
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Michael Wright is the author of FX Headlines, Fundamentals vs. Technical’s, Weekly Spotlight, and Forex Trading Weekly Forecast
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