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Canadian GDP data due out on Wednesday, September 30, holds little consequence for the loonie. Instead, broad USD variation and risk sentiment are the key drivers. 1.3420 is key resistance that opens the 1.3530 200-DMA on a breach, per TD Securities.

Key quotes

“TD looks for industry-level GDP to rise by 2.5% in July, below StatCan estimates for a 3.0% advance. This follows a stronger than expected performance in May/June and if realized would leave economic activity 6.5% below levels from February.”

“Unless the GDP report produces a tail-risk like print, the CAD is going to remain almost exclusively driven by broad USD variation and risk sentiment.”

“Last week, we turned bullish on USD/CAD. We hold this bias still – albeit to a more modest degree – following a decent leg higher. Still, we think the 1.3420 double-top in USD/CAD is prone to breach, leaving the 200-DMA at the 1.3530 level as a reassessment point for USD/CAD longs.”