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

Canadian GDP overview

Wednesday's economic docket highlights the release of monthly Canadian GDP growth figures for April, scheduled to be published at 12:30 GMT. The Canadian economy is anticipated to have contracted by 0.8% during the reported month. This would be the first decline since the first wave of the pandemic in April 2020.

Statistics Canada will also give a glimpse into reading on real GDP for May. With many restrictions still in place, May isn't expected to be any better as the country struggles with the third wave of COVID-19 infections.

How could it affect USD/CAD?

Ahead of the key release, the USD/CAD pair witnessed a modest pullback from one-and-half-week tops and was last seen trading just below the 1.2400 mark. The downtick was exclusively sponsored by a fresh leg up in crude oil prices, which tend to underpin demand for the commodity-linked loonie. A stronger-than-expected print, though seems unlikely, might provide an additional boost to the Canadian dollar and exert some pressure on the major, though the downside is more likely to be limited.

Renewed worries about the economic impact of the spread of highly infectious Delta variant of the coronavirus have dampened risk appetite. Apart from this, speculations that the Fed will tighten its monetary policy if price pressures continue to intensify acted as a tailwind for the safe-haven US dollar. This, in turn, should extend some support to the major. Moreover, investors might also refrain from placing any aggressive bets ahead of Friday's release of the closely watched US NFP report.

Meanwhile, a weaker reading would be enough to provide a fresh lift to the USD/CAD pair. This, in turn, should pave the way for an extension of the recent strong rebound from the vicinity of the key 1.2000 psychological mark, or multi-year tops touched on the first day of June.

Key Notes

  •  USD/CAD Weekly Forecast: Oil prices and US payrolls in the dock

  •  USD/CAD analysis: Remains below 1.2400

  •  USD/CAD Price Analysis: Bulls challenge 100-day SMA near 1.2400

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.