USD/CAD – Canadian dollar slips as GDP contracts for second straight month

The Canadian dollar has lost ground in Friday’s North American session. Currently, the pair is trading at 1.3220, down 0.34% on the day. It’s a busy day for fundamentals. Canada’s GDP for December dropped 0.1%, shy of the estimate of 0.0%. In the U.S., Core PCE Price Index ticked up to 0.5%, while Personal Spending declined 0.5%. Later in the day, the US releases ISM Manufacturing PMI and UoM Consumer Sentiment.

The U.S. received a GDP report card on Thursday, and the results were good. Advance GDP, which was released a month late due to the government slowdown, showed a gain of 2.6% in Q4. Although this was weaker than the 3.4% gain in Q3, it was well above the estimate of 2.2%. The unexpectedly solid reading can be credited to strong consumer spending and business investment. It’s hard to argue that the U.S. economy is not performing well, with a strong expansion of 3.1% in 2018. Even with the GDP release, it’s unlikely that the Federal Reserve will veer from it dovish stance.

It is Canada’s turn on Friday, with the release of GDP for December. Recent numbers have not been encouraging. The economy has declined by 0.1% in the past two months, and recent retail sales reports also pointed lower. The Bank hiked rates three times last year, but has since stayed on the sidelines, with the benchmark rate pegged at 1.75%. Inflation levels remain weak, as CPI posted a small gain of 0.1% in January, after two successive declines. With inflation well below the BoC’s target of 2%, it’s unlikely that the bank will raise rates unless the Canadian economy shows clear signs of improvement.

Aussie rebounds on Caixin PMI

Negativity bias overwhelms GDP and MSCI

USD/CAD Fundamentals

Friday (March 1)

  • 8:30 Canadian GDP. Estimate 0.0%. Actual -0.1%
  • 8:30 US Core PCE Price Index. Estimate 0.2%. Actual 0.2%
  • 8:30 US Personal Spending. Estimate -0.2%. Actual -0.5%
  • 8:30 (Dec. Data) US Personal Income. Estimate 0.5%
  • 8:30 US Personal Income. Estimate 0.3%
  • 9:45 US Final Manufacturing PMI. Estimate 53.7
  • 10:00 US ISM Manufacturing PMI. Estimate 55.6
  • 10:00 US UoM Consumer Sentiment. Estimate 95.8
  • 10:00 US ISM Manufacturing Prices. Estimate 51.6
  • 10:00 US Revised UoM Inflation Expectations
  • All Day – US Total Vehicle Sales. Estimate 16.8M

*All release times are EST

*Key events are in bold

USD/CAD for Friday, March 1, 2019

USD/CAD, March 1 at 8:50 EST

Open: 1.3175 High: 1.3226 Low: 1.3130 Close: 1.3220

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.3049 1.3125 1.3200 1.3290 1.3383 1.3445

USD/CAD was flat in the Asian session and has posted small gains in European trade. The pair has recorded strong gains early in North American trade

  • 1.3200 has switched to a support role after strong gains by USD/CAD on Friday
  • 1.3290
  • Current range: 1.3200 to 1.3290

Further levels in both directions:

  • Below: 1.3200, 1.3125, 1.3049 and 1.2969
  • Above: 1.3290, 1.3383 and 1.3445

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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.