Forex Signal (Tue November 30 2010, 8:30Am NY Time EST) - CA GDP m/m...

Henry Liu

Former FPA Special Consultant
We’ll be receiving GDP release from Canada today. Here’s the forecast:

8:30am NY Time Canada GDP m/m Forecast 0.1% Previous 0.3%

The Trade Plan

I’ll be looking to BUY USD/CAD if we get a -0.2% or lower release, and SELL USD/CAD if we get a 0.4% or higher… With recent uncertainty in the European economy, a stronger GDP number may provide strong contrast and we should see more demand for CAD; on the other hand, on a worse than expected figure, market will turn on CAD... I’ll be looking for a Retracement Trade Method for this release.

For more information on my trading methods, please read:
Henry's News Trading Method.

The Market
Because GDP is basically the measurement of the “economy” as a whole and it certainly has a tremendous impact on the official interest rate, because better GDP equals to higher inflation, and higher inflation means higher interest rate. However, Canada releases its GDP on a monthly basis, which diminishes chances for surprise. As a matter of fact, CA GDP has not been a very tradable release due to the most in-line with expectation figures...

With USDCAD trading in a very tight range for the last few weeks, I do believe that regardless of the outcome of this release, USDCAD will ultimately fall back into this range again, therefore we could look for reversal from the top/bottom end of the range. However, if we do get our deviation, I'd expect market to move gradually and steadily.

Additional Thoughts
USD/CAD is my official pair for this trade, and this pair does not give up retracement easily. In the event that we get a strong release, expect USD/CAD to spike, stall, and then spike again. We may see some limited retracement, if any. The strategy to trade this release is usually just get in as soon as possible and let it ride.

Pre-news Possibilities:
We should be looking to BUY USD/CAD on dips.

GDP is defined (by wikipedia) as: “the market value of all final goods and services produced within a country in a given period of time. It is also considered the sum of value added at every stage of production of all final goods and services produced within a country in a given period of time.”

For Historical Data & Chart For CA GDP m/m


Last edited by a moderator: