Canadian dollar eyes Canada's GDP, US PCE Price Index next

[Redator]

The Canadian dollar is calm on Friday. In the European session, USD/CAD is trading at 1.3947, up 0.05% on the day.

Canada's GDP expected to post 0.1% gain

Canada's economy hasn't looked all that sharp, with three straight monthly declines in GDP. The markets are expecting a slight improvement in July, with a consensus of 0.1% y/y.

The economy has been hurt by the trade war with the United States, with trade talks ongoing but no breaktrhough in sight. US tariffs have been particularly detrimental to the manufacturing sector, which slipped 1.5% y/y in June.

The Bank of Canada lowered rates by a quarter-point earlier this month, bringing the benchmark rate to 2.5%, its lowest level since July 2022. The BoC didn't reveal much in terms of forward guidance at the meeting, as policymakers keep their options open.

Weak economic growth and a slowdown in the labor market support further rate cuts, but sticky inflation is a reason for the BOC to stay on the sidelines. There is a strong likelihood of a December rate cut, although October is also a possibility, especially if inflation moves lower.

The US releases the PCE Price Index, which is the Federal Reserve's preferred inflation indicator. The markets are expecting a small increase in inflation in August, to 2.7% y/y from 2.6% y/y in July and 0.3% from 02%.

With inflation largely under control, the Federal Reserve's priority has shifted to the US labor market. The last two nonfarm payrolls reports showed marginal job growth and missed expectations, raising concerns that the labor market is quickly losing steam. If next week's nonfarm payroll report is soft, it could cement an October rate cut.

USDCAD Technical

• 1.3965 is under pressure in resistance. Above, there is resistance at 1.3990.
• 1.3925 and 1.3900 are providing support

USDCAD 1-Day Chart, September 26, 2025

Opinions are the authors'; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. The provided publication is for informational and educational purposes only.
If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please refer to the MarketPulse Terms of Use.
Visit https://www.marketpulse.com/ to find out more about the beat of the global markets.
© 2025 OANDA Business Information & Services Inc.