Steller Canada GDP Report To Propel USD/CAD Pullback

- Canada 3Q GDP to Rebound Annualized 3.4%- Fastest Pace of Growth Since 2014.

- Will the Bank of Canada (BoC) No Longer ‘Actively’ Discuss Additional Monetary Support?

Trading the News: Canada Gross Domestic Product (GDP)

Canada’s 3Q Gross Domestic Product (GDP) report is anticipated to show the economy expanding an annualized 3.4% following a 1.6% contraction during the three-months through June, and a marked rebound in the growth rate may foster a larger pullback in USD/CAD as it dampens speculation for additional monetary support.

What’s Expected:

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Why Is This Event Important:

The BoC looks poised to carry its current policy into 2017 as ‘Canada’s economy is still expected to grow at a rate above potential starting in the second half of 2016,’ and Governor Stephen Poloz and Co. may show a greater willingness to gradually move away from its easing-cycle as the region remains ‘supported by accommodative monetary and financial conditions and federal fiscal measures.’ However, a dismal development may drag on the Canadian dollar and push the BoC to further insulate the real economy in 2017 as the central bank warns the ‘profile for growth in Canada is now lower than projected in July’s Monetary Policy Report (MPR).’

Expectations: Bullish Argument/Scenario

The pickup in private-sector consumption accompanied by the ongoing improvement in the labor market may encourage a stronger-than-expected GDP print, and the dollar-loonie may continue to pare the advance from earlier this month should the report boost interest-rate expectations.