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Canada’s 3Q Gross Domestic Product (GDP) report may generate a near-term
bounce in USD/CAD as the growth rate is expected to increase an
annualized 2.1% following the 3.1% expansion during the three-months
through June.
What’s Expected:
Why Is This Event Important:
A marked slowdown in economic activity may undermine the appeal of the
Canadian dollar as the Bank of Canada (BoC) remains reluctant to further
normalize monetary policy, and the USD/CAD may continue to track higher
in December as Governor Stephen Poloz continues to talk down interest
rate expectations.
How To Trade This Event Risk
Bearish CAD Trade: 3Q GDP Slows to 2.1% or Lower
- Need green, five-minute candle following a dismal GDP report to consider long USD/CAD entry
- If the market reaction favors a bearish Canadian dollar trade, establish long USD/CAD with two position
- Set stop at the near-by swing low/reasonable distance from cost; use at least 1:1 risk-to-reward
- Move stop to entry on remaining position once initial target is hit, set reasonable limit
- Need red, five-minute candle following the release to look at a short USD/CAD trade
- Carry out the same setup as the bearish loonie trade, just in the opposite direction
USD/CAD Daily Chart
- Need a break of the bearish trends in price & the RSI to revert back to the approach of looking for opportunities to buy-dips.
- Interim Resistance: 1.1370 (23.6% retracement) to 1.1380 (78.6% expansion)
- Interim Support: 1.1155 (78.6% retracement) to 1.1165 (23.6% expansion)
| Period | Data Released | Survey | Actual | Pips Change (1 Hour post event ) | Pips Change (End of Day post event) |
|---|---|---|---|---|---|
| 2Q 2014 |
08/29/2014 12:30 GMT | 2.7% | 3.1% | - 7 | + 30 |
