Market Spotlight: CAD GDP in Focus Next

CAD GDP Up NextThe release of Canadian GDP today will be closely watched following the recent BOC meeting. While the bank somewhat disappointed CAD bulls by holding off from any policy adjustments, it was firmly hawkish in its outlook. In terms of guidance, the BOC governor said that the bank expects to make several adjustments this year and advised that rate hikes are coming soon. In light of this, the market is widely expecting the BOC to lift rates in March, in line with the Fed. A strong reading on today’s GDP print will further reinforce these expectations, leading CAD higher near term.With oil prices holding near highs and inflation remaining elevated, expectations are firmly fixed on BOC tightening this year with some suggesting that the bank’s decision to hold off in January, might mean it needs to act at a quicker pace when it does begin tightening.Where to Trade Canadian GDP?EURCADEURCAD continues to hold within a large base of support, underpinned by the 1.4167 level. With price remaining within a large bear channel for now and with Russia/Ukraine tensions still showing clear downside risks for EUR near term, a strong reading today might be enough to fuel another leg lower as CAD traders look towards a March rate hike. Look for a break of the lows targeting 1.4029 initially and 1.3876 thereafter.

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