Canada’s Q3 GDP delivered a serious upside shock, lifting CAD and elevating the bar for BoC easing. Markets now see USD/CAD capped close to 1.41 with potential towards 1.38 by year-end, TDS’ analysts observe.
USD/CAD seen capped at 1.41, focusing on 1.38
“Q3 GDP stunned sharply to the upside with a 2.6% q/q annualized achieve, properly above expectations for a muted rebound from Q2 (TD/market: +0.5%). Not all particulars have been as upbeat with home demand down 0.1%, however historic revisions did additionally produce a constructive degree shock to 2024Q4.”
“Trade-level GDP rose by 0.2% m/m in September to match expectations, as upward revisions translated to a constructive shock on a year-ago foundation. September GDP progress was led by goods-producing industries, though new flash estimates for a 0.3% contraction in October took some shine off the report. With much less extra capability heading into 2026, right this moment’s report ought to reinforce the next bar for the BoC to renew easing subsequent 12 months.”
“A powerful GDP report boosted CAD as markets pushed greater expectations of BoC terminal price. As we’ve flagged, CAD appears to be like structurally low cost above 1.40 however wants both fast stabilization of financial exercise or USMCA extension/ commerce deal to shut its valuation hole. Additional energy in financial exercise can see continued beneficial properties in CAD with hopefully some assist from broad USD weak spot. We count on 1.41 to stay a cushty ceiling for USD/CAD and see it heading in direction of 1.38 by the top of this 12 months.”
