CAD GDP Preview: What to expect of USD/CAD

Canadian GDP figures are due later in the NA session. Market expectations see the economy to have expanded at a monthly pace of 0.1% during April, reverting the previous 0.2% contraction.

According to Rates, FX and Commodity Research at TD Securities, “This print will give a very early indication of what promises to be a very challenging Q2 for the Canadian economy. Already hampered by a poor handoff from Q1—though March could be revised higher when measured to two decimal places—the April data is expected to provide only a partial offset ahead of the disruption caused by the wildfires in Northern Alberta. Collectively these factors will leave annualized growth contracting by between 0.8% and 1.0%. While a recovery is expected over the second half of the year, the magnitude will be determined by developments in the global economy”.

Regarding USD/CAD, the so far 3-session negative streak has been sustained by increasing support to CAD following a shift in the risk appetite sentiment, as ‘Brexit’ jitters continue to recede somewhat. Initial resistance appears in the mid-1.3000s, where sits the 100-day sma, ahead of recent peaks above the 1.3100 handle. On the other hand, a breakdown of the 20-day sma at 1.2868 would expose last week’s low at 1.2674.