USD/CAD higher, US GDP tears upwards

USD/CAD is slightly higher on Thursday. In the North American session, the pair is trading at 1.3343, up 0.18% on the day. The pair has touched a daily high of 1.3390, its highest level since September 30th. In Canada, Building Permits jumped 17.0% in September, its strongest gain since May. On Friday, Canada releases its monthly GDP report, with a consensus of 0.9 per cent.

US GDP soars, jobless claims fall

US Advance GDP for Q3, the first of three estimates, was expected to bounce back after a miserable second quarter. The indicator did not disappoint, with a huge gain of 33.1%, on an annualised basis. This was stronger than the estimate of 32.0% and comes after a staggering decline of 31.4% in Q2. The reading was the best quarter on record, but investors should keep in mind the previous reading in Q2 was the worst quarter ever.

The US dollar didn’t show much reaction, as the consensus was quite close to the actual release. One significant factor in the GDP release is that it comes less than a week before the election and will be used as a political football. It’s a safe bet that President Trump will be quick to seize on the sharp jump in growth as proof that the US economy is well on its way to recovery. The Democrats will remind voters that the Q3 gain barely cancels out the staggering decline reported in the second quarter and that the US economy has still not recovered to pre-Covid-19 levels.

There was more positive news out of the US on Thursday, as jobless claims continue to fall sharply. The indicator came in at 751 thousand, down from 787 thousand a week ago. This beat the forecast of 773 thousand. A week earlier, jobless claims came in at 898 thousand, so the decline points to an impressive rebound in job creation.

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USD/CAD Technical

• USD/CAD tested resistance at 1.3376 in the North American session. The next resistance line is at 1.3432
• 1.3220 is providing support. Below, there is support at 1.3121
• The pair crossed above the 50-day MA line on Wednesday and continues its upward trend

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