The loonie was significantly weaker early in NY after a big miss on Canadian Q1 GDP was combined with a better than expected US GDP revision. The market reaction saw price rise from 1.2432 to 1.2522.
Canada’s March reading came in at -0.2%, much lower than the forecasted 0.2% gain. Quarterly GDP annualized for the first quarter disappointed with a -0.6% print. In the US, Q1 2015 GDP was revised to -0.7% from 0.2%. Expectations were for a -0.8% decline, with many expecting a bigger miss closer to -1.0%.
The USD/CAD daily chart above shows that price is tentatively respecting key resistance from the trendline that started with the 2015 high. The bullish trend is now firmly in place with price trending easily above the 50-, 100-, and 200-day SMA(s). If price continues to advance, upside may initially target the 1.2638 level, followed by the psychological 1.30 barrier.
If oil prices resume their downward spiral, we may see USD/CAD target the 1.3250 region. To the downside key support will come from the 1.2300 zone. Major support will come from the 1.20 handle.
The trade: Buy USD/CAD at 1.2500, with a stop loss at 1.2450, and a take profit at 1.2635. The Risk/Reward Ratio is close to 1:3.
Edward J. Moya
WorldWideMarkets Online Trading