The Canadian economy grew 0.2% in December and 0.8% in Q4 (annualized). In addition, the previous figures were slightly revised to the upside: Q3 saw 2.4% instead of 2.3% originally reported).
The good news sends USD/CAD to another challenge of support. Will 1.3460 break?
The weak Canadian dollar, that accompanies the economy for a long time, is beginning to bear some fruit: imports have fallen sharply, by 8.9%. So, imported goods are more expensive and therefore less attractive, also putting some kind of lid on potentially higher inflation.
However, inflation is not really a problem and worse off and the flip-side should have been stronger exports. The disappointment here is significant: they also dropped, 2.2%. It seems that demand is not really out there.
So far, the low has been 1.3468. This is certainly a tough line, as it worked as a double top in September and in December 2015. Once the pair broke higher, it rallied around 1200 pips before a complete reversal.
More: CAD Targets: Loonie Has Seen Its Worst But One Slight Dip Ahead – CIBC
