USD/CAD: Solid Canadian GDP report to fuel a loonie recovery – ING

Statistics Canada will release the second-quarter Gross Domestic Product (GDP) data later in the session, which is expected to show that the Canadian economy expanded at an annualized rate of 4.4% in the second quarter. The data could drag the USD/CAD pair below the 1.30 level, economists at ING report.

GDP numbers should endorse 75 bps hike by BoC

“CAD and NOK weakness looks unlikely to last long, as both currencies still have to fully benefit from the economic benefits of their positive terms of trade shock, which ultimately underpins sustained tightening by their local central banks.”

“Consensus is for +4.4% annualized quarterly growth. This may convince markets to fully price in a 75 bps rate hike by the Bank of Canada next week, a notion that should fuel a CAD recovery and send USD/CAD sustainably below 1.3000 despite some resilience in USD bullish momentum.”