When is the Canadian GDP report and how could it affect USD/CAD?

Canadian GDP overview

Tuesday's economic docket highlights the release of monthly Canadian GDP growth figures for December, scheduled to be published at 13:30 GMT. Statistics Canada will also release the annualized quarterly growth rate, making this event more significant than the ones including only monthly data. Consensus estimates suggest that the economy recorded a modest growth of 0.3% during the reported month and expanded by 7.5% annualized pace during the final quarter of 2020 following the previous quarter's solid recovery of 40.5% from the pandemic-induced crash.

According to Joseph Trevisani, Senior Analyst at FXStreet: “The Canadian economy is dominated by resource and extraction industries. Commodity Prices rose steadily in the fourth quarter as markets anticipated the end of the pandemic and a global economic recovery in the new year. Disappointing Retails Sales and hiring in December are unlikely to outweigh the powerful impact on the Canadian economy of buoyant commodity revenues throughout the quarter.”

How could it affect USD/CAD?

Ahead of the key data, a goodish intraday rebound in crude oil prices extended some support to the commodity-linked loonie. A stronger-than-expected reading could provide an additional lift to the Canadian dollar and pave the way for an extension of the USD/CAD pair's rejection slide from the 1.2745-50 supply zone.

That said, any meaningful slide might still be seen as a buying opportunity amid expectations of a relatively faster US economic recovery from the pandemic. A weaker print should act as a catalyst for bullish traders and allow the major to build on its recent strong rebound from multi-year lows touched last Thursday.

Key Notes

  •  Canada Gross Domestic Product Q4 Preview: Commodities and the impact of the December crunch

  •  USD/CAD Outlook: Set-up favours bullish traders, Canadian GDP eyed for fresh impetus

  •  USD/CAD loses recovery momentum near 1.2700 ahead of Canada GDP data

About the Canadian GDP

The Gross Domestic Product released by Statistics Canada is a measure of the total value of all goods and services produced by Canada. The GDP is considered a broad measure of Canadian economic activity and health. Generally speaking, a rising trend has a positive effect on the CAD, while a falling trend is seen as negative (or bearish) for the CAD.