Ontario, Canada, November 11, 2020: People line up at a Costco Store wearing face masks during the Covid-19 virus pandemic. Image source: bobhilscher © 123RF.com
Statistics Canada announced an unexpected fall in the growth rate of the country's Gross Domestic Product on a monthly basis. According to the findings of today's economic report, the GDP grew marginally by 0.8 per cent in October.
The findings of the survey fell short of the initial market expectations, which were forecasting an expansion of the economy by 0.9 per cent. Stymied growth resulted in a 0.1 per cent depreciation from September's 0.9 per cent growth.
Canada m/m GDP Growth Rate. Image source: TradingEconomics.com
Canada's economy continues to reel from the coronavirus pandemic, as the country's newly recorded cases have more than doubled in November. Daily cases nearly topped eight thousand yesterday, which is the highest daily upsurge on record.
While vaccine optimism continues to be a significant driver of the equity market's recent rally, Canada has to grapple with the possibility of worsening epidemic conditions over the next following months.
One positive development for Canada has been the rebound in the underlying demand for crude oil. OPEC's ongoing conference is bound to bring up more clarity concerning the future of the energy market, and the progress that has been made in recalibrating the market's supply and demand equilibrium.
Canada continues to be one of the largest exporters of the precious commodity in the world, which makes it's economy hugely dependent on global demand.
Meanwhile, today's news has not had a considerably massive adverse impact on the value of the Canadian dollar. As can be seen on the 4H chart below, the Loonie continues to show strength against the greenback.
The USDCAD has been establishing a massive downtrend since late-October, which can be attributed to the easing of global demand for the greenback. Nevertheless, the pair recently rebounded from a near two-year low, which gives market bears some glimmers of hope.
If the pair does indeed consolidate above the Support Area, it could attempt to form a minor bullish correction towards the major support (currently serving as resistance) level at 1.30000.
The latter has enormous psychological significance, which means that a breakout above it could potentially indicate the termination of the downtrend and the beginning of a new uptrend.
Before such a transformational change in the underlying sentiment can be confirmed; however, the price action would have to terminate the perfect descending order of the three moving averages – the 20-day MA (in red) trading below the 50-day MA (in green), which, in turn, is positioned below the 100-day MA (in blue).
USDCAD 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
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