Forex Investment and Currency Trading

After struggling under the weight of the intense global economic recession and financial crisis, the Canadian economy appears to be well and truly on its way to recovery – albeit one initially driven by the significant monetary and fiscal stimulus added to the system. In July, market expects the Canadian economy to post its second monthly GDP gain in a year with a respectable 0.4% M/M advance, following the 0.1% M.M gain the month before. The key factor driving economic activity higher in July should be strong manufacturing sector production, which boasted its biggest monthly performance (in real terms) in over 10 years. Much of this resurgence, however, was driven in large part by the resuscitation in auto production, given strong U.S. automobile demand. As such, analysts expect the goods sector to add favourably to the headline number for the first time since July 2008. The service sector should also contribute positively to economic activity, though it is likely to be modest. In the coming months, analysts expect Canadian economic activity to remain on the recovery path as the significant monetary and fiscal policy stimulus administered to the Canadian economy gather traction.

Foreign Exchange: Tomorrow morning’s North American economic data isn’t looking like it’s going to be very supportive for CAD. US G2 GDP is expected to be revised lower, which should put a dent in risk sentiment. And turning to Canada, with much of July’s gains in wholesale and manufacturing sales coming from inventory draw-downs as opposed to new production, we might see slightly weaker GDP growth in July.