[flv:http://www.newsprofiteer.com/093009-cadgdp/093009-cadgdp.mp4 480 360]
8:30am (NY Time) CA GDP m/m Forecast 0.4% Previous 0.1%
ACTION: USD/CAD SELL 0.7% BUY 0.1%
We’ll be trading the Canadian Gross Domestic Product (GDP) month on month figure, which is defined (from 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.” GDP number has a direct and strong effect on the Interest rate of the currency, and it affects BOC’s short-term rate decision directly.
We are looking for a +0.7% or better or a 0.1% or worse release on the expected 0.4%. If we get a 0.7% on the monthly GDP, it would be somewhat CA Dollar positive. We will SELL USD/CAD, and if we get a 0.1% release, then we would be BUYING USD/CAD.
Canadian Dollar has been under pressure with Crude Oil prices also consolidating from its recent highs. My long term view on the USD/CAD pair is definitely above the 1.1000 level, and at the current 1.0800 area, we are already at a heavy overbought area. Therefore, if CA GDP shows signs of weakness, it could spark another wave of CAD sell-offs.
UPDATE: GDP came out worse than expected, with the market pricing in the opposite outcome pre-news, it was a golden opportunity to go long on USD/CAD. As we got in around the 30′s, we held on to the trade until 9:45am and got out around 40~50 pips of gain. In the video I closed with about 15 pips, but I did explain the potential and we got as close as the 90′s with USD/CAD.
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