We’ll be getting GDP release from Canada today, and with BOC scheduled to hike interest rate tomorrow (Tuesday), we could expect the currency market to pay attention to this release as a stronger GDP should definitely support BOC’s rate tightening policy. Here is the forecast for Canada GDP:
8:30am NY Time Canada GDP m/m Forecast 0.5% Previous 0.3%
ACTION: USD/CAD BUY 0.2% SELL 0.8%
GDP is defined (by wikipedia) as: “the market value of all final goods and services produced within a country in a given period of time. It is also considered the sum of value added at every stage of production of all final goods and services produced within a country in a given period of time.”
As GDP is basically the measurement of the “economy” as a whole and it certainly has a tremendous impact on the official interest rate, because better GDP equals to higher inflation, and higher inflation means higher interest rate. With CAD sold off during the past few weeks as result of strong risk aversion sentiment and general depreciation of commodities, USD/CAD now has plenty of room to strengthen if this release comes out better than expcted.
I’ll be looking to BUY USD/CAD if we get a 0.2% or lower release, and SELL USD/CAD if we get a 0.8% or higher…
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