Canadian dollar steady ahead of GDP

The Canadian dollar has rebounded this week, after sustaining losses of over 1.5% last week.

One of this week’s highlights is Canada’s GDP, which will be released later today. After a strong gain of 0.8% m/m in October, the markets are braced for a slowdown in November, with a consensus of 0.3%. A reading below zero could weigh on the Canadian dollar, while a figure of 0.7% or higher would show that the economic recovery continues at a brisk pace and would likely boost the Canadian dollar. The Omicron wave has dampened economic activity, but we are seeing more of the economy reopen, with Ontario and Quebec easing Covid restrictions as of today.

Fed unclear on rate policy

The Federal Reserve is on the verge of raising rates, with a lift-off likely at the March meeting. But what is the game plan after that? Chair Jerome Powell left guidance unclear at last week’s meeting, apart from stating that the Fed planned a gradual reduction in support for the economy.

The forecast for the number of rate hikes we’ll see in 2022 ranges from 5-7, with speculation that the Fed could hike rates at every meeting this year if needed. At last week’s meeting, Powell noted that FOMC officials were still undecided on guidance and four FOMC members reiterated that point in public remarks on Monday.

If the Fed is undecided about policy, it’s no wonder that the markets remain unclear as to how many rate hikes to expect. The Fed had penciled in three rate hikes this year and some dovish FOMC members still favor that number. However, with inflation much higher and more persistent than the markets had expected, there is a strong chance of more rate hikes.


USD/CAD Technical

  • USD/CAD faces resistance at 1.2857 and 1.2948
  •  There is support at 1.2615 and 1.2464

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Kenny Fisher

Kenny Fisher

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

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