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CANADA: USDCAD Reverses GDP Climb, Yields Still Weighed

CANADA
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  • USDCAD has fully reversed the increase seen after Canadian GDP data indicated disappointing momentum heading into Q4, with October tracking at ~0.8% annualized vs the BoC forecast of 2.0% for Q4.
  • It’s currently at 1.4010 having pulled back from a high of 1.4046. The increase saw a move closer to near-term resistance at 1.4078 (Nov 27 high) but was still far below the bull trigger seen from Monday’s snap higher to 1.4178 on tariff threats.
  • The sharp improvement in equity futures is playing a large role along with a lesser factor from WTI futures unwinding earlier losses.
  • The GDP report continues to weigh on BoC implied rates and yield differentials though, with 36-37bp of cuts priced for Dec 11 (from 33bp prior, and less than 30bp after Trudeau’s fiscal stimulus).
  • The 2Y GoC yield is -5.6bp post-data (-8.2bp on the day). It sees the Can-US 2Y yield differential -4.2bp since the data (-3.7bp on the day) at -108.5bps for a further move away from last Friday’s recent high of circa -95bps. 
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  • USDCAD has fully reversed the increase seen after Canadian GDP data indicated disappointing momentum heading into Q4, with October tracking at ~0.8% annualized vs the BoC forecast of 2.0% for Q4.
  • It’s currently at 1.4010 having pulled back from a high of 1.4046. The increase saw a move closer to near-term resistance at 1.4078 (Nov 27 high) but was still far below the bull trigger seen from Monday’s snap higher to 1.4178 on tariff threats.
  • The sharp improvement in equity futures is playing a large role along with a lesser factor from WTI futures unwinding earlier losses.
  • The GDP report continues to weigh on BoC implied rates and yield differentials though, with 36-37bp of cuts priced for Dec 11 (from 33bp prior, and less than 30bp after Trudeau’s fiscal stimulus).
  • The 2Y GoC yield is -5.6bp post-data (-8.2bp on the day). It sees the Can-US 2Y yield differential -4.2bp since the data (-3.7bp on the day) at -108.5bps for a further move away from last Friday’s recent high of circa -95bps.