Canadian dollar climbs after stronger January and February GDP

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USD/CAD fell about 20 pips on a strengthening Canadian dollar following upbeat numbers on January and February GDP.

Canada’s economy grew 0.6% in January 2024 in the best monthly gain in a year. That follows a series of flat-or-negative numbers stretching over the prior six months.

Unfortunately, the number isn’t quite as strong as it seems. It was boosted by a big contribution from educational services after a teachers’ strike in Quebec ended.

However the good news didn’t end there as the preliminary February GDP reading was +0.4% in a broad based gain that shows the Canadian economy still has some strength, even if it’s largely driven by population growth.

USD/CAD was at 1.3592 before the data and fell to 1.3572 afterwards.

The fall today looks like another rejection of the 1.3600 level. The pair has touched that level on 10 separate days since February 27, failing to close above it every single time.

The Canadian dollar is being helped along by oil prices, which are up $1.26 today to $82.60 and have risen $5 since mid-February.

If that level breaks, it could create a run on stops but that won’t happen if Canadian economic data keeps beating estimates and the housing market holds up. My latest checks show decent on-the-ground housing demand in what’s a critical moment for the struggling sector.