Canadian GDP Report – CAD Forecast
March 30th, 2009 Posted in Market Movers
The Canadian Dollar was losing ground midway through Monday’s trading as investors reposition their Loonie trades in anticipation of monthly GDP numbers from Canada. The USD/CAD reached all the way to the 1.2536 level from an opening of 1.2412.
At this weekend’s G20 Summit in London, Prime Minister Harper has given his support for the Bank of Canada (BoC) to take alternative measures to fight the current economic crisis. The BoC will outline its proposed measures to boost the Canadian economy in its regularly schedule meeting on April 23.
Despite the difficult recession Canada is facing, the Loonie has strengthened this month by 2.2% against the U.S. Dollar, as a rally in Crude Oil prices has had a positive effect on the Canadian Dollar. Last week, the Parliament’s budget office said the Canadian economy will contract by 8.5% on an annualized basis in the first quarter of the year. The Canadian GDP for the months of November and December each fell by 0.7% and 1.0% respectively. The forecasted value for January’s GDP is a contraction of 0.6%.
These GDP numbers should serve as a harsh reality for those that are bullish on the Canadian Dollar. The Canadian economy is not immune from the effects of the economic depression. This could play out in tomorrow’s trading session when traders will brace for the release of the monthly GDP numbers from Canada. If the reading comes in worse than the forecasted value, look for the USD/CAD to rise close to the 1.2600 resistance level.
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