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 word.
USD/CAD seen capped at 1.41, focusing on 1.38
“Q3 GDP shocked sharply to the upside with a 2.6% q/q annualized acquire, nicely above expectations for a muted rebound from Q2 (TD/market: +0.5%). Not all particulars had been as upbeat with home demand down 0.1%, however historic revisions did additionally produce a constructive degree shock to 2024Q4.”
“Business-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 development 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, as we speak’s report ought to reinforce a better bar for the BoC to renew easing subsequent yr.”
“A robust GDP report boosted CAD as markets pushed larger expectations of BoC terminal price. As we have now flagged, CAD seems 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 good points in CAD with hopefully some assist from broad USD weak spot. We anticipate 1.41 to stay a snug ceiling for USD/CAD and see it heading in the direction of 1.38 by the top of this yr.”
