Usdcad Trades At Month Highs

last updated on

Usdcad Trades At Month Highs

Usd/Cad Trades At 8-Month Highs Around 1.3850

USD/CAD is trading near the 1.3850 handle on Thursday and is sitting at 8-month highs. The strength of the USD/CAD is coming from the recently released US Q2 GDP which was above the forecasts.

The data showed a 2.8% growth in the US economy during the 2nd quarter. That's almost double the earlier reading of 1.4% and shows robust growth in the US economy.

The expectations for the US Q2 GDP were near 2.0%, but there was a reading of 2.8% has taken everyone by surprise. This has also reaffirmed the strength of the US economy. After the release of the data, the DXY moved higher to around 104.40.

Gdp Price Index Decline To 2.3%

Some may think that the US GDP data will be used as an excuse by the Federal Reserve to delay September's rate cut. However, the GDP price index, which is a measure of changes in goods/services prices, showed a decline of 2.3%. So, the Q2 GDP data will actually bolster the case of a rate cut rather than delay it.

Meanwhile, the outlook for the CAD is still vulnerable in the near term as the BoC governor has issued dovish comments on the interest rate. Yesterday, the Bank of Canada lowered the borrowing rate by 25 bps, which means the new rate in Canada is now 4.5%.

For the most part, a dovish decision, such as the recent rate cut, was mostly priced in by the investors. However, it is the dovish guidance for the future that keeps the Canadian dollar under the cap.

According to the BoC governor's comments, the door for future rate cuts is still open, provided that inflation stays in the Bank's provided range. He made it clear that the central bank is really confident that all actions needed to lower the inflation are in place. During the 2H2025, the inflation will return back to the 2% target, according to BoC forecasts.

Trending Stories