Forex News: Loonie Drops on a Negative GDP Surprise
THE TAKEAWAY: Canadian GDP declines 0.1% in August -> First economic decline since February -> USDCAD now trading above parity
The Canadian gross domestic product declined for the first time since February of this year, sending the CAD lower against the USD in forex markets. The economy shrank by 0.1% in August, disappointing expectations for a 0.2% economic expansion. The GDP is still 1.2% higher than August 2011, according to Statistics Canada.
The decline was led by a 0.5% drop in goods production, a result of decreases in mining and gas and oil extraction. Services industries didn’t see a change in outputs. Following the 0.9% increase in July, mining fell 0.6% in August.
Canada’s economy has been struggling to grow as a result of global pressures, and an economic contraction is CAD negative. That’s why the Canadian Dollar dropped 23 points against USD following the forex news release, and is now trading above parity. Resistance could be provided by a 2-month upward trend line near 1.0026.
USDCAD 15-minute: October 31, 2012
“Meet the DailyFX team in Las Vegas at the annual FXCM Traders Expo, November 2-4, 2012 at the Rio All Suite Hotel & Casino. For additional information regarding the schedule, workshops and accommodations, visit the FXCM Trading Expo website.”
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.