The release of the Canadian GDP growth rate will be a salient event on the domestic calendar on Friday. Markets expect the economy to have expanded 0.5% during the July-September period compared with the same period a year earlier.

Canadian GDP expected to recover after sinking in Q2

After shrinking at an annualised rate of 1.6% in the previous quarter, the Canadian economy looks to have bounced back nicely, with growth expected to land around 0.5%, which is right in line with what the Bank of Canada (BoC) had been looking for.

On a monthly basis, GDP is forecast to expand by 0.2% in September, recovering from a 0.3% decline in the previous month.

It’s also worth noting that the BoC delivered another 25 basis points rate cut on October 29, taking the policy rate down to 2.25%. During that meeting, officials revised their forecast, projecting growth of approximately 1.1% in 2026 and 1.6% in 2027, as the economy gradually stabilises.

According to analysts at TD Securities, “Q3 National Accounts provide the main risk event this week with another update on how economic activity has evolved into H2, with TD and the market looking for a partial (+0.5%) rebound from the 1.6% pullback in Q2.”

When will the GDP be released, and how could it affect USD/CAD?

Statistics Canada is set to disclose the GDP figures at 13:30 GMT on Friday.

For USD/CAD, a stronger-than-expected result could give the Canadian Dollar (CAD) a brief lift. But any reaction is likely to be short-lived, given that the pair has been moving almost entirely to the rhythm of the US Dollar (USD) lately. And that, in turn, comes down to shifting market expectations about when the next Federal Reserve (Fed) rate cut will be.

Pablo Piovano, Senior Analyst at FXStreet, notes that the Canadian Dollar has managed to appreciate a tad since its lows earlier this month, prompting USD/CAD to slip back toward the sub-1.4100 region. Meanwhile, further gains appear likely above the key 200-day SMA near 1.3922.

Piovano notes that the resurgence of a bullish tone could encourage the pair to challenge the November ceiling at 1.4140 (November 5) before attempting a move to the April peak at 1.4414 (April 1).

Conversely, Piovano highlights that minor support comes at the November base of 1.3971 (November 18), prior to the always-relevant 200-day SMA at 1.3922. The loss of the latter could expose a deeper pullback to the October floor at 1.3887 (October 29) ahead of the September trough at 1.3726 (September 17) and the July valley at 1.3556 (July 3).

“In addition, momentum indicators remain constructive: the Relative Strength Index (RSI) hovers around the 53 level, while the Average Directional Index (ADX) near 20 suggests a still firm trend,” he says.

Economic Indicator

Gross Domestic Product (MoM)

The Gross Domestic Product (GDP), released by Statistics Canada on a monthly and quarterly basis, is a measure of the total value of all goods and services produced in Canada during a given period. The GDP is considered as the main measure of Canadian economic activity. The MoM reading compares economic activity in the reference month to the previous month. Generally, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.

Read more.

Last release:
Fri Oct 31, 2025 12:30

Frequency:
Monthly

Actual:
-0.3%

Consensus:
0%

Previous:
0.2%

Source:

Inflation FAQs

Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.

The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.

Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.

Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it.
Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.