USD/CAD Holds Steady as Canada's GDP Data Release Looms

The USD/CAD exchange rate is holding steady above its 200-day moving average at around 1.3840 as investors await Canada's GDP data release, set to happen at 8:30am New York time.

Economists expect a rebound in Q2, with the economy forecasted to grow at a 3.4% SAAR pace after contracting by -0.1% in Q1.

The recovery is expected to be driven by domestic demand and exports, but an escalating US-Canada trade war poses risks to this growth, potentially limiting its durability.

Core inflation in Canada is running at 2%, leaving the Bank of Canada with room to stay on hold. Markets are currently pricing in 75bps of BoC hikes over the next twelve months, which may lead to a repricing and a stronger USD/CAD near 1.4000.