USD/CAD – Loonie takes flight after stronger GDP

  • Canada Jan GDP +0.3% From Dec
  • Canada Industrial Prices +0.3% In Feb From Jan
  • Canada Raw Materials Prices +4.6% In Feb From Jan
  • Canada expands in January

    Data this morning showed that the Canadian economy expanded in January, beating market expectations and fully offsetting the reported declines that were posted in November and December.

    According to Stats Canada, Canada’s GDP increased +0.3% in January from the previous month to a seasonally adjusted C$1.95T. Market expectations were looking for a headline gain of +0.1%.

    Canadian producer prices rose In February

    Stats Canada also said that Canadian producer prices rose in February, mainly due to higher prices for energy and petroleum products.

    Canada’s industrial product price index rose +0.3% in February, following the -0.3% decline in January. On a 12-month basis, the producer-price index was up +1.2%.

    Note: The index measures the price manufacturers in Canada receive, it does reflect the final prices consumers pay for goods.

    As for raw materials, prices paid by manufacturers in February rose +4.6%, following a revised +4.0% gain in the previous month. February’s increase was mostly because of higher prices for crude energy products. On a 12-month basis, prices for raw materials are down -0.6%.

    Loonie takes off

    Canada’s GDP headline print handily beat market expectations and with WTI back trading above the psychological $60 handle, is providing support for CAD.

    Loonie bull’s brought CAD on the release which has taken USD ‘bulls’ by surprise. CAD is +0.65% higher at C$1.3346. Strong support for the USD appears around C$1.3325-30. Expect those long USD positions that have been caught off side to be a willing USD seller on upticks.

    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.

    Dean Popplewell

    Dean Popplewell

    Vice-President of Market Analysis at MarketPulse
    Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
    Dean Popplewell