Canadian Dollar: GDP rebound supports Loonie – TD Securities

TD Securities economists Robert Both and Emma Lawrence expect Canada’s Q2 National Accounts to show a sharp rebound in Gross Domestic Product (GDP) growth, driven by stronger exports and solid services activity. They forecast expenditure-based GDP at 3.5% annualized and industry-level GDP up 0.3% m/m, with July flash data likely keeping Q3 GDP above potential output, reinforcing a constructive backdrop for the Canadian Dollar.

Exports seen driving Q2 recovery

"Q2 National Accounts provide the main risk event this week, where TD looks for a sharp rebound from the Q4/Q1 slowdown with expenditure-based growth of 3.5% (market: 3.3%) on stronger exports."

"We look for expenditure-based GDP to post a sharp rebound in Q2 with annualized growth of 3.5%, underpinned by stronger exports."

"Industry-level GDP for June should mirror the Q2 strength with a 0.3% m/m increase, above flash estimates for a 0.2% print."

"We also look for new flash estimates to show continued momentum into July to leave Q3 GDP tracking above potential output."

"Thursday's payroll employment report will provide a final look into June growth conditions when released Thursday alongside the current account balance for Q2."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)