Canadian GDP Advances Less Than Expected in the Second Quarter

Economic activity in Canada rose 0.2 percent in June after rising 0.1 percent the month prior

, while the second quarter annualized gross domestic product advanced 2.0 percent amid economists' forecasts of 2.5 percent. Indeed, the USDCAD pushed higher subsequent to the release of the report; however, we will likely see increased volatility during the North American trade as market participants shift their focus to the U.S. consumer confidence report and the FOMC minutes.

Taking a look at the breakdown of the report, business investment was the largest contributor to growth, while final domestic demand added 3.6 percent. Meanwhile, expenditures on non-durable goods and services increased 3.9 percent and 4.8 percent respectively, while machinery and equipment jumped 29.7 percent. Today's report may ease pressure for the central bank to raise borrowing costs at its rate decision on September 8th. As of late traders are pricing in a sixty four percent chance that the BoC will raise its key overnight lending rate twenty five basis points, according to the Credit Suisse overnight index swaps. As indicated by today's report, economic activity in Canada will likely be moderate as the region's largest trading partner, the U.S. faces major headwinds in the coming months.

Canada's GDP

Source: Bloomberg

USD/CAD Daily Chart

Source: FXCM's Strategy Trader Prepared by Michael Wright

After testing the 38.2 percent Fibonacci retracement, the pair ahs reversed course, and now looks poised to test 1.0700. At the same time, with the recent break above the descending channel and our speculative sentiment at -1.180, I do not rule out further gains in the pair.

Canadian GDP Advances Less Than Expected in the Second Quarter

By: DailyFX

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