Trading News Events: Canada Gross Domestic Product (GDP)

Trading News Events: Canada Gross Domestic Product (GDP)

28 November 2014, 12:15
Sergey Golubev
1
180

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
Bullish CAD Trade: Canada Growth Rate Exceeds Market Forecast
  • 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
Potential Price Targets For The Release
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)
Impact that the Canada GDP report has had on CAD during the previous quarter

PeriodData ReleasedSurveyActualPips 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
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