Canada’s GDP surpassed expectations of .1 percent by expanding growth .3 percent in August. Oil and natural gas production allowed Canada to earn the quickest quarterly expansion in two years. Output rose to $1.59 trillion CAD, according to Statistics Canada.
Growth is on track for 2.5 percent annualized this quarter. Canada had been struggling recently and out shadowed by the United States economically. The Bank of Canada chose not to increase rates do to the slack in the economy. “It’s still going to be a long time before the output gap closes,” said Mark Chandler, head of fixed-income strategy at Royal Bank of Canada.
The energy sector was a bright spot for Canada with oil and natural gas extraction increasing by 2.8 percent in August. Manufacturing was lagging and fell .3 percent.
The Canadian dollar had almost reached two month lows against the US dollar as USDCAD heading to 1.05. However, the Canadian dollar gained some ground on the positive GDP data.
The daily chart shows that price action surpassed resistance and the 23.6 percent Fibonacci level at 1.0420 before hitting the ascending trend line from the high of 1.0607. The pair is likely to see support given the US dollar’s rally. Look for support at 1.0420 and near the 20 EMA at 1.0385.
The USDCAD will potentially target 1.05 once again. If broken, the next level of resistance will be at 1.055.