Tuesday’s Canadian GDP data release is shaping up to be one of the more important data points this week, especially given the markets focus on the next move from the bank of Canada and USDCAD traders are preparing for a lively trading day around it. Last week’s stronger than expected inflation data out of Canada has pulled back expectations of further rate cuts from the central bank and another strong print on Tuesday would likely pull back those expectations further and see the Canadian dollar appreciate both against the dollar and on the crosses.
The market is expecting the data to show a 0.4% month-on-month increase and traders are expecting that anything +/- 0.1% will see good moves in the market. USDCAD has seen a combination of lower oil prices and a stronger dollar combine to drive the pair higher by over 5% since recent lows at the beginning of May in the middle of the conflict in the gulf and traders are looking for the next catalyst for moves in the coming days.
A stronger print should see good Cad buying and take the pair down towards short term support just above 1.4000 while a surprise weaker print would see recent annual highs just under 1.4250 challenged in short order with a break there opening the way for more significant gains from a technical perspective. The pair will undoubtedly be affected by US employment data this week as well, but the Canadian numbers earlier in the week could provide the springboard for traders to jump into a longer-term trade.
Resistance 2: 1.4543 – March 2025 High
Resistance 1: 1.4248 – 2026 High and Trendline Resistance
Support 1: 1.4008 – Short Term Trendline Support
Support 2: 1.3945 – Trendline Support
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