Statistics Canada released Q2 2024 Gross Domestic Product (GDP) on Friday and revealed economic activity grew more than expected, though it relied heavily on government spending (up +6.7%). On an annualised basis, GDP rose +2.1%, comfortably surpassing economists’ estimates and the BoC’s forecast of +1.5%. Albeit an impressive start to the first half of the year, under the hood shows it’s not all it’s cracked up to be. GDP per capita declined -0.1% (marking a fifth consecutive quarterly decline), and month-on-month GDP was flat in June. According to the flash estimate, July is also poised for another flat reading, lending to a weak Q3.
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With a rate cut baked in, this is unlikely to generate much ‘surprise’; therefore, we can expect a limited market response. Traders will focus on the language from the rate statement and the press conference for clues of further easing, potentially weighing on the Canadian dollar (CAD) and underpinning the USD/CAD currency pair, which ended August lower by -2.3%.