Strong Canadian GDP
Canada GDP surged 0.6% in January, much better than expected and well above the most optimistic scenario (median +0.2%) following the 0.2% gain in December. This is the fourth straight monthly gain. The acceleration in January was driven by manufacturing (+1.9%), retail trade (+1.5%), and mining, quarrying, and oil and gas extraction (+0.9%). Utility production rebounded 2.7% in January on a return to more seasonal weather after the 2.5% drop in December that was due to unseasonably warm conditions. By sector, goods producing industries jumped 1.2% in January after the 0.3% gain in December. Service producers expanded 0.4% in January after an 0.2% gain in December. This is a strong report that underpins the view that Canada’s economy is adjusting to the lower commodity/oil price environment. Moreover, the big gain in January GDP improves the prospects for Q1 GDP.
USD-CAD fell to new five-plus month lows of 1.2882 in the aftermath of the much better than expected January Canada GDP outcome. The October 15 low of 1.2833 becomes the next downside target, with a break there taking the pairing to eight-month low territory. Oil prices will need to head higher again however, if further USD-CAD losses are to be seen. Short term resistance at 1.30958 10 Day MA and then 1.3219-1.3260.
Chief Market Analyst
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About Janne Muta, HotForex’s Chief Market Analyst
Janne Muta is a seasoned industry professional with over 16 years experience in the global markets. Originally from Finland, Janne has worked for institutions in both Helsinki and London as an institutional fund manager, global market analyst and FX educator.
Traders and fund managers from around the world have benefited greatly from Janne’s technical analysis methods. The indicators and price action based trading models he has developed, have, after rigorous testing, proven to be invaluable in identifying high probability trades.
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