Analysts at TD Securities (TDS) offered a brief preview on Thursday’s release of Canadian monthly GDP print for November and also the near-term outlook for the USD/CAD pair.
“While FX investors continue to grapple with virus contagion concerns, today’s Canadian GDP report is our main data focus. We look for a flat print on industry-level GDP for November, in line with the market consensus, due to weakness across goods and services. Transitory factors will have offsetting impacts, reflecting a rebound in auto production, after the UAW disrupted supply chains the prior month, alongside a headwind from the impact of cold weather and the CN strikes. Unchanged GDP would leave Q4 tracking near the BoC’s latest projections (0.3%).”
“We continue to favour topside in USDCAD. Today’s clear break above the 200-dma (1.3228) has brought the pair up to trendline resistance at 1.3240/45. This could usher in renewed buying interest if we manage to close this week above that mark. With support to be found in the 1.3150/80 zone, the next major objective higher comes in around the November/December highs near 1.3325. We note, however, spot is inching toward “overbought” conditions on the daily RSI. This could begin to constrain the pace of gains in USDCAD if bullish catalysts diminish.”