Canada GDP came in much stronger 2.6% versus 0.5% expected. According to StatCan "the rise in the third quarter was driven by a strengthening trade balance, as imports dropped and exports edged up. Increased capital investment was driven by government capital spending, as business investment was flat. Overall growth was dampened by declines in household and government final consumption expenditures as well as a slower accumulation of business inventory."
It is an interesting development which may have economist looking more closely at the flow of goods into the country. I can see Canada shunning American goods in reaction to tariffs on their exports. However, it should be replaced by goods from alternative countries if it is not made internally. Was it a data collection issue as well because of the US shutdown. It is an outlier which demands watching going forward.
The USDCAD started to tilt lower even before the data hit, and the selling accelerated after the release — raising the question of whether it was a leak or just thin conditions amplifying the move. The fall pushed the pair below the 50% retracement of the range from the late-October low, a level that sits at 1.40135. That midpoint now becomes a near-term risk marker for traders leaning toward further downside.
On the downside, the next targets are the 61.8% retracement, followed closely by a key swing zone between 1.39684 and 1.39750. That area has been a major pivot for both buyers and sellers since early October, repeatedly acting as a point of rejection and reversal. A test of that zone today — or in the sessions ahead — is likely to be a critical battleground for control.
Stay alert.
