Canadian dollar hits 2-year high

The Canadian dollar is almost unchanged in the Wednesday session. Currently, USD/CAD is trading at 1.2937, up 0.03% on the day.

The US dollar continues its sad-sack role as a punching bag for the major currencies. The Canadian dollar has jumped on the bandwagon, and posted considerable gains on Tuesday. Earlier on Wednesday, USD/CAD touched a low of 1.2916, its lowest level since October 2018.

Canada GDP slows in September

Canada releases its GDP reports on a monthly, rather than quarterly basis. The pace of growth has been steadily declining since June, which registered a stellar gain of 6.5%. September growth slowed to 0.9%, down from 1.2% beforehand. On a quarterly basis, the economy rebounded strongly in Q3, with a record annualised GDP of 40.5%. However, in a Refinitiv survey, economists had forecast a gain of around 47%. Without question, the leap in Q3 is positive news. At the same time, one must keep in mind that second-quarter GDP set a record decline of 38%, and that even with the huge boost in Q3, economic growth remains below pre-pandemic levels. The first two quarters of 2o2o were in negative territory, which means that officially, the economy was in a recession.

The markets have shifted their focus to Friday, when both the US and Canada release key employment numbers. Canada Employment Change is projected to slow to just 22 thousand, which would mark a negligible gain. If the actual reading is not stronger than the estimate, investors could get nervous about the health of the labor market and give the Canadian dollar a thumbs-down. Earlier on Wednesday, Canada released Labour Productivity for the third quarter. The decline of 10.3% was worse than expected, as the street consensus stood at -6.9%.

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USD/CAD Technical

• 1.2939 is under pressure in support. Below, there is a support line at 1.2885
• We find resistance at 1.3080, followed by resistance at 1.3167
• USD/CAD has moved some distance below the 10-day MA line

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