CAD: Canada GDP smashes expectations at 2.6% – TDS

FXStreet Insights Team FXStreet

Canada’s Q3 GDP delivered a major upside surprise, lifting CAD and raising the bar for BoC easing. Markets now see USD/CAD capped near 1.41 with potential toward 1.38 by year-end, TDS' analysts note.

USD/CAD seen capped at 1.41, targeting 1.38

"Q3 GDP surprised sharply to the upside with a 2.6% q/q annualized gain, well above expectations for a muted rebound from Q2 (TD/market: +0.5%). Not all details were as upbeat with domestic demand down 0.1%, but historical revisions did also produce a positive level shock to 2024Q4."

"Industry-level GDP rose by 0.2% m/m in September to match expectations, as upward revisions translated to a positive surprise on a year-ago basis. September GDP growth was led by goods-producing industries, although new flash estimates for a 0.3% contraction in October took some shine off the report. With less excess capacity heading into 2026, today's report should reinforce a higher bar for the BoC to resume easing next year."

"A strong GDP report boosted CAD as markets pushed higher expectations of BoC terminal rate. As we have flagged, CAD looks structurally cheap above 1.40 but needs either quick stabilization of economic activity or USMCA extension/ trade deal to close its valuation gap. Further strength in economic activity can see continued gains in CAD with hopefully some help from broad USD weakness. We expect 1.41 to remain a comfortable ceiling for USD/CAD and see it heading towards 1.38 by the end of this year."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD clings to daily gains near 1.3350

GBP/USD holds just in positive territory around 1.3350 on Friday as the Greenback keeps a vacillating price action. With Fed rate hike expectations easing and US markets closed for the Independence Day holiday, Cable remains on track to post solid weekly gains.

EUR/USD remains sidelined around 1.1440

EUR/USD holds on to its recent gains and consolidates around 1.1440 at the end of the week as the US Dollar lacks clear direction. In the meantime, trading conditions remain subdued, with volatility constrained by the closure of US markets for the Independence Day holiday.

Gold flirts with two-week highs, targets $4,200

Gold extends its recovery for a third straight day, advancing toward the $4,200 mark per troy ounce on Friday. The precious metal looks set to snap a four-week losing streak as softer-than-expected June US NFP data prompt investors to scale back expectations of further Fed tightening.

Crypto Today: Bitcoin, Ethereum, XRP advance amid renewed capital inflows

Bitcoin maintains its upward momentum, holding above the $61,000 mark at the time of writing on Friday. Major altcoins such as Ethereum and Ripple are also posting gains, signaling a modest uptick in market sentiment and renewed risk appetite among investors.

The Iran war failed to trigger a recession. Can the US economy keep defying expectations?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Kevin Warsh offers no policy clues: Why markets still got their answer

Financial markets came to Sintra looking for clues about the Federal Reserve's (Fed) next move. They largely left with confirmation that Fed Chair Kevin Warsh intends to make those clues much harder to find.