The greenback gains against the Canadian dollar after data shows that Canada’s gross domestic product came inline with expectations at .1 percent, following the previous quarter’s .2 percent expansion. The poor showing was blamed on a harsh winter that hindered construction, business spending and exports.
According to Statistics Canada, annualized gross domestic product was revised downward from 2.7 percent to 1.7 percent. Exports fell at an annualized pace of 2.4 percent, while consumer spending only grew at an annualized rate of 1.2 percent – the lowest pace in two years. According to the Bank of Canada (BoC), gross domestic product must expand more than 1.9 percent in order to exceed the economy’s non-inflationary potential and reduce spare capacity.
The hourly chart of USDCAD show a price action break of a couple minor downtrends following the so-so data out of Canada. Price action was quickly rejected off the hourly 200 EMA after the US dollar began to sell-off before the New York trading session. Traders are likely to re-challenge the nearest downtrend at 1.0845 with a secondary support level found at 1.0835.
A break of the hourly 200 EMA would send the pair to 1.0872. However, the move in US treasuries and poor GDP figures, US dollar basis is to the downside.