USDCAD has faced some opposition from rising above the resistance level of $1.308. During the Asian session today, the bears pushed the price down from this level to a new low at $1.3068. The selling pressure on this pair is increasing as the market awaits the Canadian GDP m/m report.
The Canadian Gross Domestic Product (GDP) is an essential economic data point that measures the country's total national income and output within the concluded period. It also measures the total cost of producing goods and services. According to World Bank records, the Canadian GDP has been found to cover almost 1.49% of the world economy. Hence, investors always pay great attention to this report to determine if the economy is still growing or slowing down. The outcome of this report today will be a significant factor influencing USDCAD performance in the forex market.The forecast for this data is 0.1%, while the previous record was 0%. Higher readings of the Canadian GDP will attract more investors into the economy. This will lead to a reversal for USDCAD.
Apart from the report on the Canadian GDP, other important economic data comes from the US zone, which will also influence the performance of USDCAD in the market today.
The most important of these factors is the US Automatic Data Processing (ADP) Non-Farm Employment Change report. This report provides an estimated account of the total changes in the number of employed people in the US private sector for the just concluded month but excludes the farm sector. A higher reading from this report will strengthen the US dollar and cause a more bullish trend for USDCAD, while a lower reading from this report will lead to a decline in the bullish trend for USDCAD. The forecast for this data is 300K, while the previous record was 128K.
Another essential factor that will influence the performance of USDCAD in the market today will be the result of the US Chicago Purchasing Managers Index (PMI). This data provides an index report of the purchasing capacity for all the purchasing managers in Chicago. Higher reading
The PMI points to a growing economy, which is positive for the US dollar. Therefore, we can expect a continuation of the bullish trend for USDCAD should the reading come higher. On the contrary, lower readings from this report will diminish the bullish trend for USDCAD. The forecast for this data is 52.5, while the previous record was 52.1.
Nonetheless, the President of the Federal Reserve Bank of Cleveland, Loretta Mester, is set to deliver a speech today which will dwell on the Federal monetary policy and where the FOMC can be expected to set the interest rate during their next session in September. The other hawkish stance from her speech will trigger a more bullish trend for USDCAD.
Above all, today’s oil inventories report will further determine the fate of the Canadian dollar and whether the bullish trend for USDCAD will give way to bears taking their turn. The crude oil inventory measures the changes in the total number of crudes in stock by various commercial firms. Lower readings from this inventory will create more demand for crude oil, leading to higher WTI prices. The Canadian dollar has always benefited from rising oil prices as oil remains the primary export product of Canada. Therefore, we can expect the bearish trend for USDCAD to continue should the report on the oil inventory come lower than forecasted. The forecast for this data is -0.4M, while the previous record was -3.3M.
How will the Canadian GDP report affect USDCAD today?
The GDP report is essential economic data closely monitored by investors as it gives the overall productivity level of the country within a given period. Higher readings from this report often attract more investors into the economy. This means we can expect a bearish trend for USDCAD should the GDP report come higher than forecasted.
On the contrary, a reduction in the Canadian GDP often discourages investors. This could result in a continuation of the bullish trend for USDCAD.
USDCAD forecast ahead of the GDP report
USDCAD is currently in a downward trend after facing rejection at the resistance level of $1.3095. A double top has been formed at this level, signalling a possible reversal. However, this will depend on the outcome of the economic data to be released today.
Should the bears prevail over this pair, the next support level is $1.3007. A break below this could trigger more downside, with the target at $1.2979.
On the contrary, should the bulls return to push above the current resistance level at $1.3095, we can expect more upside to the previous high at $1.3106.