Canada is printing its GDP this week! What are traders expecting from the event? More importantly, how will the Loonie react?
Here are catalysts that might move the comdoll over the next couple of days:
GDP report (Aug 30, 1:30 pm GMT)
In last month’s release we found out that Canada’s economy had grown by 0.2% in May, which marked the third consecutive growth for the economy.
The Loonie jumped at the better-than-expected release, but soon lost momentum thanks to a less dovish than expected FOMC statement.
This week analysts expect to see growth take a chill pill from 0.2% to 0.1% in June.
Don’t forget that quarterly numbers are also due this week! Analysts see growth printing at a strong 2.9% after clocking in a 0.4% growth in the previous quarter.
Dovishness of central banks all over the world have increased pressure on the Bank of Canada (BOC) to follow suit and loosen their own monetary policies.
If this week’s GDP data print better-than-expected, then there will be less pressure on the central bank to cut its rates. But if we see significant GDP misses, then we could see the Loonie trade lower against its major counterparts in anticipation of some sort of easing from the central bank.
Overall risk sentimentAs mentioned in other currency updates, a relatively empty data calendar means that traders will more likely pay attention to economic themes from other major economies.
One risk factor this week is the G7 meetings, which could produce headlines related to Brexit, Iran nuclear trade deals, and global trade tensions.
Speaking of trade tensions, the U.S. and China really went at it last Friday. In case you missed it, China is now planning on slapping tariffs on $75 billion worth of U.S. products, while Trump has “ordered” U.S. companies to find other countries other than China to do business with.
Will trade tensions escalate this week? Or will the reps find common ground enough to soothe market concerns?
Missed last week’s price action? Read CAD ’s price recap for August 19 – 23!