Canada's GDP expected at 0.1%, Canadian Dollar hits three-week high

The Canadian dollar has posted three consecutive winning days against the US dollar. Earlier, the Canadian dollar strengthened to 1.3738, its highest level since August 8. In the European session, EUR/USD is trading at 1.3748, up 0.05% on the day.

Canada's GDP projected to show marginal expansion

Canada releases GDP for June later today, with a market estimate of 0.1%. This follows two straight readings of -0.1%, and if the estimate for June is confirmed, it would point to a weak second quarter with no growth.

The US tariffs have taken a toll on Canada's economy, although many analysts expected that the US-Canada trade war would be far more damaging to the Canadian economy. Some 20% of Canada's economy is made of exports to the US and a prolonged disruption in trade between the two countries could send Canada into a recession.

There is an exemption from tariffs for Canadian exports that are covered by the US-Canada-Mexico agreement, but that deal is up for renegotiation in 2026, and President Trump will be a tough negotiating partner.

Bank of Canada Governor Macklem has said that the economy has held up with "some reliance" despite US tariffs. At the same time, he warned that the economy would be "on a permanently lower path" due to the tariffs.

US core PCE expected to remain at 0.3%

The US wraps up the week with the core PCE price index, the Federal Reserve's preferred indicator for undelying inflation. The market estimate for July stands at 0.3%, unchanged from June, which was the highest level in four months. Annualized, core PCE is expected to nudge up to 2.9% from 2.8%.

USD/CAD technical

USD/CAD is testing resistance at 1.3754. Above, there is resistance at 1.3768.

There is support at 1.3746 and 1.3732.