Canada: Q2 GDP growth rebounds, but the future remains murky – TD Securities

Canada’s real GDP rose by 3.7% q/q in Q2 (consensus: 3.0%, TD: 3.3%), but the strength was almost entirely due to strong exports and falling imports.

Key Quotes

“Household spending grew at just a 0.5% pace, while domestic demand actually contracted on the quarter at -0.7%. We expect the Bank to focus on the poor underlying details in next weeks interest rate announcement.”

“Industry level GDP rose by 0.2% m/m (consensus: 0.1%, TD: 0.2%), with 17 of 20 sectors posting increases.”

“FX: The CAD caught a small bid following the positive headline surprises, but extension follow-through in USDCAD is limited with attention squarely on the BOC decision next week. With cuts well priced into the curve (for October), the hurdle to see the CAD weaken might be a bit too high. Instead, we think CAD may perform vs. an anemic EUR next week.”