By Gary Howes

The Canadian Dollar (CAD) has been hit by a fresh wave of selling pressure following the release of on-target Canadian GDP results earlier.

Gross Domestic Product (MoM) (Nov) came in at 0.2 pct today - where analysts had expected. The previous month's reading was at 0.3 pct, confirming the Canadian economy is slowing. Currency markets have reacted:

The pound sterling to Canadian dollar exchange rate (GBP/CAD) is 0.42 pct higher at 1.8476.The euro to Canadian dollar exchange rate (EUR/CAD) is 0.14 pct higher at 1.5148.The US dollar to Canadian dollar exchange rate (USD/CAD) is 0.43 pct higher at 1.1207.Be Aware: All CAD quotes are taken from the inter-bank markets. Your bank will deliver your currency after levying a spread on the rate. However, an independent FX provider will guarantee you a more competitive spread, thus delivering up to 5% more currency. Please learn more here.

Stephen Gallo at BMO Capital says markets have just been looking for an excuse to pull the trigger on another CAD sell-off:

"The market feels like it is positioned short CAD heading into the data, as key November data suggest risks to GDP are skewed to the downside.

"The market doesn’t really appear to be fearful of a short CAD squeeze at this stage, and most other factors still suggest topside risks outweigh downside ones. We look for USDCAD to remain comfortably above 1.115 even in the event of CAD short covering. 1.1225-1.1250 is really the next main target range."

Meanwhile, Month-end flows are expected to be USD-positive, "adding a bit more “oomph” to the generally firmer USD that has emerged from the mid-week FOMC meeting," says Shaun Osborne at TD Securities, "risk aversion will help the USD gain, perhaps more so versus the high beta currencies."

Osborne made an interesting observation ahead of the data release which will give an indication as to how to approach the CAD going forward:

"The CAD has not been especially connected to the recent resurgence of the risk on/off trends in the market. As noted above, the AUD has broadly been more sensitive to swings in EM FX and equities and even the GBP is recording a tighter correlation with equities than the CAD at the moment.

"The CAD is just marching to its own beat at the moment and that means that domestic data may have more of an impact than usual."

TD Securities remain bullish overall and continue to target the 1.1265/75 area as our near-term technical objective.

Global markets on the back-foot

Global indices are once again on the back foot after worrying Eurozone inflation figures added to emerging market concerns.

Inflation within the bloc remained well under the 2 percent target that the ECB set, printing at 0.7 percent for January.

"The disappointing data, that has been driven by falling energy prices, adds pressure on policymakers who must decide whether or not to cut interest rates next week," says Max Cohen at Spreadex.

Meanwhile, concerns regarding emerging markets don’t seem to budge. Countries in Asia, Latin America and emerging Europe are being forced to raise interest rates sharply to prevent currency collapses and a mass withdrawal of foreign investors.

"It is important to bear in mind that emerging markets on the whole performed disappointingly in 2013. As well as missing the 4.7 percent growth target the IMF set, its premium over growth rates in advanced countries has shrunk to its lowest in a decade," says Cohen.

Across the Atlantic, U.S stock-index futures have retreated once again with the S&P 500 heading for its worst January since 2010. Despite the worrying start to 2014, U.S earnings have performed fairly well.

About 79 percent of the companies in the measure that have posted earnings this season exceeded analysts’ projections. However, U.S headline indices are still set for their first monthly decline since August 2013.