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USD/CAD Rally Continues, GDP Next

By MarketPulse (Kenny Fisher)CurrenciesMar 31, 2023 06:18AM ET

www.investing.com/analysis/usdcad-rally-continues-gdp-next-200636804

By MarketPulse (Kenny Fisher) | Mar 31, 2023 06:18AM ET

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USD/CAD

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The Canadian dollar is looking sharp, with gains of 1.5% this week against the greenback. The week wraps up with Canadian GDP while the US releases the Core PCE Price Index. In the European session, USD/CAD is trading at 1.3549, up 0.21%.

Canada’s GDP expected to rise

Canada’s economy recorded zero growth in the fourth quarter, ending a streak of five straight winning quarters. This was a major disappointment, as the estimate stood at 1.5%. The lack of growth is an indication that the Bank of Canada’s rate hikes have slowed economic activity, although the labor market remains surprisingly robust.

Will we see an improvement in the economy? GDP is projected to have improved to 0.3% in January, driven by growth in manufacturing and consumer spending in January. As well, the labor market crushed it, adding 150,000 new jobs in January, versus 15,000 anticipated.

The Bank of Canada always keeps a close eye on employment and inflation, which are key factors in the central bank’s rate decisions. BoC policymakers now have a new headache, namely, the banking crisis which caused market mayhem across the globe. The crisis has eased somewhat, with no new contagion since the collapse of Credit Suisse and four US banks. Still, the BoC is concerned over fallout from the crisis. BoC Deputy Governor Gravelle said this week that the BoC was monitoring the stresses to the global banking system as the bank considers its next rate move and economic projections at the April 4^th meeting.

The Bank of Canada left rates unchanged at 4.5% at its meeting earlier this month, the first time it has paused during the current rate-tightening cycle which began last year. The markets expect the BoC to continue to pause at the next meeting, although the central bank remains concerned about the robust labor market and strong wage growth.

The US wraps up its week with the Core PCE Index, the Fed’s preferred inflation indicator. The consensus estimate stands at 0.4%, versus 0.6% prior. Personal Spending and Personal Income are also expected to soften. If these indicators head lower, it would likely weigh on the US dollar, due to higher expectations of the Fed easing policy.

USD/CAD Faily Chart

USD/CAD Technical

USD/CAD is testing resistance at 1.3553. Above, there is resistance at 1.3649
1.3475 and 1.3384 are providing support

Original Post

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US 30	33,600.5	+538.9	+1.63%
US 500	4,277.1	+56.1	+1.33%
Dow Jones	33,636.02	+574.45	+1.74%
S&P 500	4,279.90	+58.88	+1.39%
Nasdaq	13,238.66	+137.68	+1.05%
S&P 500 VIX	14.73	-0.92	-5.88%
Dollar Index	103.800	+0.298	+0.29%

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Brent Oil	75.84	+1.56	+2.10%
Natural Gas	2.213	+0.055	+2.55%
Gold	1,980.45	-15.05	-0.75%
Silver	23.823	-0.164	-0.68%
Copper	3.7295	+0.0185	+0.50%
US Soybeans	1,346.25	+17.25	+1.30%

U.S. 10Y	3.668	+0.067	+1.88%
U.S. 30Y	3.864	+0.040	+1.08%
U.S. 5Y	3.807	+0.106	+2.87%
U.S. 3M	5.417	+0.031	+0.58%
US 10Y T-Note	114.09	-0.64	-0.56%
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Amazon.com	125.22	+2.45	+2.00%
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Bank of America	28.87	+1.09	+3.92%

	Interest Rates	Next Meeting
FED	5.25%	Jun 14, 2023
ECB	3.75%	Jun 15, 2023
BOE	4.50%	Jun 22, 2023
SNB	1.50%	Jun 22, 2023
RBA	3.85%	Jun 06, 2023
BOC	4.50%	Jun 07, 2023
RBNZ	5.50%	Jul 12, 2023
BOJ	-0.10%	Jun 16, 2023
CBR	7.50%	Jun 09, 2023
RBI	6.50%	Jun 08, 2023
PBOC	3.65%
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USD/CAD Rally Continues, GDP Next

Canada’s GDP expected to rise

USD/CAD Technical

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