Investors focus shifts to Canada's May GDP. The market is looking for the fifth consecutive monthly decline at -0.2% from a month earlier.
At this level the trend in activity would dip below both the 3- and 6- mma, implying further deceleration in the economy. The chief driver of the economic slowdown remains the second round effects of the sharp drop in oil prices. The slowdown in mining and energy-related activities has weighed on growth.
Indeed, in June the mining industry showed a 2.6% decline from the month prior, coinciding with a 6.4% decline in annual terms. Services failed to offset the contraction from the goods-producing sector with manufacturing also denting the growth numbers. The uptick in retail sales at the end of period should help offset some of weakness in goods producing sectors but not by enough to get growth back above zero.
In turn, we like fading CAD rallies near 1.28.
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