The USDCAD currency pair was trading up over 52 pips after the release of Canadian GDP data, which beat analysts' estimates. According to Statistics Canada, the country’s GDP grew 0.1% in September and 0.7% in the third quarter, beating analysts' estimates of 0.4% quarterly growth.
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However, investors were disappointed to see the GDP print translate into a 2.9% annualised rate in the three months from July to September. Investors expected a higher annualised GDP growth rate, which saw them dump the Canadian dollar.
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Furthermore, a decline in crude oil prices, as tracked by the West Texas Intermediate, also dragged the commodity-linked loonie lower. The WTI was trading up 2.77% at writing but has fallen significantly this month.
The sour investor risk appetite also boosted the US dollar as the Chinese government doubled down on its zero COVID policy despite widespread protests. Most investors are worried that the rolling lockdowns in China will drag down the global economy.
The recent reelection of Xi Jinping as China’s President for a third term has cemented his grip on the country, even triggering a change in the US approach to China. As a result, the world has to deal with an emboldened Xi Jinping for the next five years.
President Joe Biden’s muted reaction to the protests indicates the United States' shift to a more diplomatic approach to China was primarily driven by the outcome of the last Chinese Communist Party conference that saw Xi Jinping oust all his opposers to become China’s most powerful leader since Mao Zedong.
The uncertainty surrounding China’s next moves boosted the US dollar against most of its peers, including the Canadian dollar, as evidenced by today’s price action. Investors will now turn to the upcoming nonfarm payrolls and tomorrow’s Fed Chair Jerome Powell’s speech.
*This is not investment advice.
USDCAD price chart.
The USDCAD currency pair was trading up 52.9 (0.39%) at writing following Canada’s GDP data release.
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