Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

Free Trading Guides
Subscribe
Please try again
Select

Live Webinar Events

0

Economic Calendar Events

0

Notify me about

Live Webinar Events
Economic Calendar Events

H

High

M

Medium

L

Low
More View More
Canadian Dollar Dented by GDP Data, But USD/CAD Near-Term Downtrend Holds

Canadian Dollar Dented by GDP Data, But USD/CAD Near-Term Downtrend Holds

Daniel Dubrovsky, Contributing Senior Strategist

Share:

Canadian Dollar, USD/CAD, Australian Dollar, China PMI – Asia Pacific Market Open

Forex for Beginners
Forex for Beginners
Recommended by Daniel Dubrovsky
Forex for Beginners
Get My Guide

Asia-Pacific Market Briefing – Canadian Dollar Sinks After Local GDP Slows

The Canadian Dollar underperformed against its major counterparts on Tuesday, also tracking a cautious deterioration in risk appetite. At one point, the S&P 500 was down about 0.6% before trimming some of its losses. On the chart below, USD/CAD can be seen very closely inversely tracking stock markets. Interestingly, the Loonie was unable to capitalize on a strong performance in crude oil prices.

At 13:30 GMT, the latest Canadian GDP figures crossed the wires. Annualized quarterly growth clocked in at 2.9%, which was far greater than the 1.5% outcome. However, GDP was 0.1% m/m in September, in-line with expectations. Meanwhile, August’s output was revised higher to 0.3% m/m from 0.1%. In effect, Canadian growth slowed, opening the door to a less aggressive Bank of Canada.

In the context of daily moves since the beginning of 2020, USD/CAD’s 0.7% rise on Tuesday was about 1.34 standard deviations from the average. Using a cumulative distribution function, the probability that CAD weakens by 0.7% or more is at least about 10%. Granted, past performance is not necessarily indicative of future output.

Canadian Dollar and S&P 500

Canadian Dollar and S&P 500

Chart Created in TradingView

Wednesday’s Asia Pacific Trading Session – Australian Dollar Eyeing China PMIs

The cautious mood on Wall Street could be setting up financial markets for a similar performance during Wednesday’s Asia-Pacific trading session. The Australian Dollar will be closely watching November’s Chinese PMI gauges. Non-manufacturing data is seen clocking in at 49, down from 49.2 in October. Values below 50 indicate shrinking economic activity. Considering China has been having a bumpy ride with moving past strict Covid lockdowns, a softer print risks sending AUD/USD lower. China is Australia’s largest trading partner. Softer economic output in the former often implies knock-on impacts for the latter.

Canadian Dollar Technical Analysis

On the daily chart, USD/CAD seems to have reinforced a near-term falling trendline from October. Prices were unable to break above resistance, maintaining the downside focus that has been prevalent for a few months. A turn lower places the focus on the 38.2% Fibonacci retracement level at 1.3513. On the other hand, confirming an upside breakout opens the door to reversing the near-term downtrend.

Trade Smarter - Sign up for the DailyFX Newsletter

Receive timely and compelling market commentary from the DailyFX team

Subscribe to Newsletter

USD/CAD Daily Chart

USD/CAD Daily Chart

Chart Created in TradingView

--- Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com

To contact Daniel, follow him on Twitter:@ddubrovskyFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES