0830 CAD GDP m/m (+0.1% exp, +0.2% prior, -0.1% to +0.2% range )
Affliated News Releases at 08:30 :
CAD GDP y/y (+2.7% expected, +3.0% prior, +2.6% to +2.9% range )
US Durables ex Transporation (+0.4% exp, +0.7% prior, -0.5% to +1.5% range)
US Durable Goods Orders (+2.2% exp, -0.7% prior. -2.0% to +7.0% range )
US Cap Goods Orders Nondef Ex Air (+1.0% exp, -1.8% prior, +0.4% to +2.0% range)
US Cap Goods Ship Nondef Air (-1.1% prior)
US Personal Income (+0.2% exp, +0.4% prior, 0.0% to +0.4% range)
US Personal Spending (+0.3% exp, +0.1% prior, +0.2% to +0.6% range)
US PCE Deflator (YoY) (+2.7% exp, +2.7% prior, +2.6% to +3.0% range)
PCE Core (MoM) (+0.1% exp, +0.1% prior, 0.0% to +0.2% range)
PCE Core (YoY) (+1.7% exp, +1.7% prior, +1.6% to +1.8% range)
This GDP release from Canada can move the CAD forex pair very well, this is because unlike the US or UK,
in Canada they release fresh GDP data each month, not Preliminary, Revised, Advanced & Final. Today is
the final trading day before Christmas and this news unfortunately comes out at the same time as a carpet
bombing of US data. However things could be worse, most of the US data is not very major and will probably
not affect prices very much unless there is a blockbuster headline generating deviation, something along
the lines of "lowest reading in 3 years" for example. Last month there was a -0.1% deviation along with
the previous month being revised up from +0.3% to +0.4%...so combined flat, the YoY figure was +0.3% higher,
coming out at +3.0% above the +2.7% expected. There is also a Quarterly GDP Annualized figure which came
out last month which was +3.5% above the +3.0% expect. This number only comes out quarterly so it will next
be released on Feb. 3rd 2012. This is mentioned because the USDCAD did about 60 pips in the half hour after
the release. It had eased about 20 pips from 1.0205 to 1.0182 in the 5 minutes leading into the release...
a rumor or a leak perhaps, not uncommon on Canadian news. There was a 30 pip burst in the 2 minutes after
the release, then a retrace of half of that over the next 6 minutes leading to 10-15 minutes of flat price
action until 20 minutes after the release a further move down of 35 pips occurred as the top of the hour
approached..9am EST. The purpose for mentioning this is usually we focus on the monthly deviation but in
this case it was actually negative but the revision to the previous month cancelled this, but the move came
from the deviation in the YoY and QoQ figures. In the previous months we have had small deviations that may
have quickly blipped up or reacted from other news in the 8:30am timeslot or general market sentiment...Going
back it is really July that had the best deviation: a -0.4% deviation on MoM (-0.3% actual vs +0.1% expected)
along with a -0.6% deviation on the YoY (+2.2% acutal vs +2.8% expected), and instant blast higher on the
USDCAD forex pair as the Canadian Dollar weakened, going from 0.9500 to 0.9545 in the 1st minute after the
release...it never looked back and 6 minutes later was +50 pips higher at 0.9562 and after 3 minutes and a
10 pip retrace back to the key mid-figure 0.9550, it again moved higher reaching 0.9590 by the top of the hour
9am EST, 20 minutes after the release for a total of +90 pips. As for he Durable Goods, a +1.3 deviation
on October 26th did lead to a rally in risk, and this was the final leg of the October rally which reversed
the big drops in risky assets seen in September. The market did take about 15 minutes to absorb the figure
and start to rally. So watch anything over +/-1.2, if the deviation is +/-2.5 then this would be quite
significant and worth exiting any positions entered from the Canadian GDP number immediately. A deviation
close to +/-1.2 means you will have some time and should just be vigilant. It is of course nearly Christmas
and volumes are very thin, the market has become alot slower moving. Thin liquidity can either mean
exaggerated moves, or very small moves. Still I think going with the usual +/-0.3 is fine but if more
conservative due to thin volume then add an additional +/-0.1 to the trigger. Of course make sure the YoY
figure agrees with the deviation of the MoM and any revisions to last month also agree or do not significantly
conflict.
If it comes out at +0.4% or higher, USD/CAD should drop 30-40 pips.
If it comes out at -0.2% or lower, USD/CAD should rally 30-40 pips.
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