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    MARKET ANALYSIS AND NEWS Strong Canadian GDP Market News

    USDCAD, Daily  

    Canada GDP surged 0.6% in January, much better than expected and well above the most optimistic scenario (median 0.2%) following the 0.2% gain in December. This is the fourth straight monthly gain. The acceleration in January was driven by manufacturing ( 1.9%), retail trade ( 1.5%), and mining, quarrying, and oil and gas extraction ( 0.9%). Utility production rebounded 2.7% in January on a return to more seasonal weather after the 2.5% drop in December that was due to unseasonably warm conditions. By sector, goods producing industries jumped 1.2% in January after the 0.3% gain in December. Service producers expanded 0.4% in January after an 0.2% gain in December. This is a strong report that underpins the view that Canada’s economy is adjusting to the lower commodity/oil price environment. Moreover, the big gain in January GDP improves the prospects for Q1 GDP.

    USD-CAD fell to new five-plus month lows of 1.2882 in the aftermath of the much better than expected January Canada GDP outcome. The October 15 low of 1.2833 becomes the next downside target, with a break there taking the pairing to eight-month low territory. Oil prices will need to head higher again however, if further USD-CAD losses are to be seen. Short term resistance at 1.30958 10 Day MA and then 1.3219-1.3260.


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