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Previewing tomorrow’s gross domestic product (GDP) data from Canada, “Industry-level GDP  growth is forecast to rise by a muted 0.1% in July due to continued softness in the goods-producing sector,” TD Securities analysts said.  

Key quotes

“The bar to move the CAD meaningfully one way or the other is pretty high right now. While an upside surprise is likely to be looked through by the market, a downside surprise is unlikely to provide the same degree of urgency to price in easing in the rates curve vs. FX/CAD. Overall, the CAD remains resilient and pinned between a 1.3150/3350 range in USDCAD. Expectations for a moderation in growth have been well telegraphed and are well appreciated at this point, so we do not think a negative surprise will do that much to unnerve the CAD.”

“Instead,  with the CAD the next high yielder after the USD in the G10 and BOC cuts still some time away, we think the CAD is likely to perform on crosses – particularly into a heavy US data calendar week where we expect a rebound in ISM manufacturing. We are particularly focused on EURCAD, where it looks technically vulnerable to another leg lower.”