Canadian Dollar Hits Highest Level Since October on Weak USD and Strong GDP

CAD Gains as USD Slips and BoC Expected to Hold Rates

The Canadian Dollar (CAD) has rallied to its strongest level since October, trading below 1.37 against the US Dollar (USD), amid improving domestic data and weakening USD sentiment. According to Scotiabank's Chief FX Strategist Shaun Osborne, strong Q1 GDP data has helped reinforce expectations that the Bank of Canada (BoC) will hold interest rates steady this Wednesday.

Q1 GDP Boosts Confidence Despite Underlying Softness

On Friday, Canada’s Q1 GDP surprised to the upside, triggering a moderate repricing in swaps ahead of the upcoming BoC decision. While April indicators suggest a modest 0.1% GDP increase, the overall trend provided just enough support to delay any rate cut expectations.

Two major Canadian banks, including Scotiabank, shifted their forecasts to expect a rate hold rather than a cut, reflecting a growing confidence in the central bank’s cautious stance.

Trade and Tariff Strategy in Focus

As US tariffs loom, Canadian PM Carney is meeting with provincial leaders to advocate for intra-provincial trade liberalization, aiming to stimulate domestic growth to offset the impact of external pressures.

Meanwhile, the USD/CAD pair has slipped below 1.3700, marking a fresh cycle low and suggesting continued bearish momentum for the USD. Scotiabank’s analysis of daily and weekly charts points to increasing downside risk for the Greenback.

Technical Outlook – USD/CAD Remains Under Pressure

Support: 1.3650, 1.3600
Resistance: 1.3745/50
Trend signals across intraday, daily, and weekly charts are pointing toward continued CAD strength, aligning with a USD-negative narrative.