Canadian dollar eyes Canadian GDP

The Canadian dollar is showing little movement on Friday, but that could change with the release of Canadian GDP and the US PCE Price index later today. USD/CAD is trading at 1.3660 in the European session, down 0.15% on the day.

Canada’s economy expected to have flatlined in March

Canada’s economy is expected to have remained unchanged in March, after a weak gain in February of just 0.2% m/m, which was less than expected. The year started out on a high note, as the economy climbed 0.6% m/m in January, but since then the economy has looked sluggish. On an annualized basis, first-quarter GDP is expected to have expanded by 2.2%, compared to 1% in the fourth quarter of 2023.

If today’s GDP report misses expectations, it will put more pressure on the Bank of Canada to lower rates at next week’s meeting. The Bank of Canada has held rates at 5% for six straight times, and restless consumers are looking for some rate relief as they continue to feel the squeeze of elevated rates and the high cost of inflation. The conditions appear to be right for a rate cut, as the economic slowdown has been accompanied by falling inflation.

In April, CPI dropped to 2.7%, down from 2.9% a month earlier. With the headline and core rates below 3%, a rate cut is possible even with inflation above the BoC’s 2% target.

In the US, the Personal Consumption Expenditure Price Index, which is closely watched the Federal Reserve, is expected to remain unchanged at 2.7% y/y and 0.3% m/m, respectively. An unexpected reading could shake up USD/CAD in the North American session.

USD/CAD Technical

  • USD/CAD is putting pressure on support at 1.3650. Below, there is support at 1.3617
  • 1.3692 and 1.3725 are the next resistance lines

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Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including Investing.com, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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