Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

Flat Q3 GDP pushes USD/CAD to one-year peak amid forecasted rate reduction

EditorHari G
Published 10/31/2023, 12:07 PM

The US Dollar to Canadian Dollar (USD/CAD) exchange rate has reached a one-year high, following an underwhelming performance of Canada's economy in the third quarter of 2023. The flat Q3 GDP comes on the heels of a slight dip in Q2, falling short of the Bank of Canada's growth projection of +0.8%.

Goods-producing industries, predominantly agriculture, have been on a downward trend for five consecutive months due to drought conditions in Western Canada. This downturn was further exacerbated by early quarter disruptions from fire and strikes, a decline in retail sales, and a stall in the post-pandemic recovery of food and accommodation services.

CIBC warns that this downturn may undervalue the actual economic strength. Despite the current economic climate, Canada has experienced robust population growth and many homeowners have yet to feel the impact of higher interest rates.

In response to these factors and in an effort to prevent further economic decline, CIBC forecasts that the Bank of Canada will transition from rate hikes to cuts next year. This prediction is based on the expectation that a rate reduction will stimulate economic activity and counterbalance the challenges currently facing goods-producing sectors.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.