$USDCAD bullish streak continues after mixed data and BOC survey

The Canadian dollar firmed up after October GDP came in at the fastest pace in 5 months as manufacturing bounces back and almost fully offsets declines in August and September. The month on month reading grew at 0.3%, higher than the 0.2% analysts’ eyed, and an improvement from the -0.1% reading from the prior month. The construction sector declined for the fifth consecutive month in October, edging down 0.1%.

Retail sales for Canada was also released simultaneously and missed across the board with downward revisions. Sales for October posted 0.3% growth, an improvement from the downward revision reading of 0.1%, but a miss of the 0.5% economists expected.

The loonie gave back its gains however after the November BOC Business Outlook Surveyed indicator decreased slightly but was still elevated, signaling that business sentiment overall continues to be positive. Overall, firms no longer anticipate capacity pressures to intensify, pointing to increases in investment and employment that expand productive capacity, and expectations that demand in the Prairies and around housing in some regions will moderate.

The mixed survey and data, the last before the Bank of Canada rate decision on January 9th is unlikely to change anything. We may not see the central bank consider a hike until the summer.

Price action on the USDCAD daily chart shows the strong bullish upswing is poised for the 7 consecutive day. If price closes above the 1.3550 level, bullish momentum could target the 1.3760. It is around that area price could form a bearish butterfly pattern.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya ‏
Ed Moya