CAD: A big week ahead - Westpac

Richard Franulovich, Research Analyst at Westpac, suggests that it’s a big week ahead for CAD, headlined by the BoC but also including the RBC and IVEY PMI surveys and August employment.

Key Quotes

“Q2 GDP (-1.6% annualised) was weaker than both the BoC (-1%) and markets (-1.5%) expected but the Bank will breathe a sigh of relief that June monthly GDP printed on the strong side at +0.6%. They are likely to stick with a steady “the current stance of monetary policy is appropriate” message. Look for a big bounce back in full time jobs after a steep 112k in jobs losses the last two months.

Bias:

• A punchy 0.6% rise in June GDP confirms the much hyped recovery from recent wildfires is now well underway (the BoC assumes 3.5% for Q3 GDP).
• Trudeau's fiscal stimulus kicks in Q4 too and Canada's terms of trade hit is moderating as oil spends more time in higher ranges ($40-$50/bbl) than seen earlier this year ($25-$35/bbl).
• The BoC likely sticks to a cautious neutral view 7 Sep.
• USD/CAD a sell into the late July 1.3250 highs if seen.”