US/CAD GDP Preview: what to expect of USD/CAD
|Advanced US GDP figures for the second quarter are due later today along with May’s GDP results in the Canadian economy. Market consensus expects the US economy to have expanded at an annualized 2.6% during Q2, strongly rebounding after a lacklustre first quarter. Canadian economy, instead, is seen contracting 0.4% on a monthly basis.
In the FX space, strategists at TD Securities argued “Our broadly in line consensus expectation for GDP should have little bearing on USDCAD, though we think there is sufficient uncertainty around the estimate and external events that leaves conviction levels low and two-way risk around the currency pair. Indeed, the data will also have to be digested with the simultaneous release of US GDP, which we expect will print in line with consensus, but perhaps more importantly potential residual effects from the BOJ decision on broader risk sentiment. Provided that the latter is contained/digested well by markets by the time North American markets open, we think a small moderate washout in positioning towards the 1.3070/80 area should offer a better risk/reward profile to accumulate longs as USDCAD price action to us suggest that the rally looks a little tired.”
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