USD/CAD: Loonie weakens after GDP miss and on oil profit-taking

  • Canadian economy struggles to find growth
  • Oil price rally exhausted as $100 price remains elusive
  • GDP sends BOC rate hike odds down; October 25th meeting at 30.4% vs yesterday’s 42.2%

USD/CAD rises to a two-week high after loonie bulls disappeared after a disappointing July GDP report.  It looks like Wall Street was a bit too optimistic on the Canadian economy and expectations for August is for a similar reading. The Canadian economic outlook is struggling as the impact from Bank of Canada’s aggressive rate hiking campaign is dragging the economy down.  Stubborn inflation won’t be enough to keep the Bank in hiking mode as the manufacturing sector struggles.  We might have to wait till 2024 for any signs of a reacceleration, so the loonie remain a choppy trade that sees a higher correlation with oil prices.


After an amazing week, month and quarter, oil was ready for some profit-taking. Energy traders quickly realized this wasn’t the time for oil to rally above the $100 a barrel level, so they are cautiously locking in some profits. Also supporting the minor drop was the EIA report that US output from the Permian Basin hit an all-time high. Oil isn’t going to have a major pullback given how tight the market will remain following the Russian fuel curbs and on expectation China’s golden week travel will boost jet fuel demand. Brent crude should have major buyers awaiting ahead of the $94 a barrel level.

Key resistance for USD/CAD lies at the 1.3650 region, with the 1.3700 level being a key price barrier.  If bearishness returns, downside targets include the 1.3450 level, followed by 1.3320.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.