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CAD: Avoiding a recession, on path to recovery – Rabobank

FXStreet (Delhi) – Research Team at Rabobank, suggest that after the Canadian economy fitted the criteria for technical recession as its Q1 and Q2 GDP contracted by -0.1 q/q and -0.2% q/q respectively, the economy is showing some resilience and is most likely on the path to recovery.

Key Quotes

“Currently there is good reason to doubt whether recessionary conditions have settled over the Canadian economy. Despite the obvious difficulties experience by the energy sector this year, the economy as a whole created 170,100 new jobs in the 12 months to July and there is evidence of a tightening labour market.”

“In a speech last week, BoC Governor Poloz stated that the Canadian economy “is able to deal with the challenges posed by large movement in resources prices” even though “these adjustments are often difficult and painful for the people affected”.”

“After the September 9 policy meeting the BoC stated that “movements in the Canadian dollar are helping to absorb some of the impact of lower commodity prices and are facilitating the adjustments taking place in Canada’s economy. While the overall export picture is still uncertain, the latest data confirm that exchange rate-sensitive exports are regaining momentum”.”

“Later this week, Canada is due to release its monthly GDP report for August. The market is expecting a decent 0.2% m/m increase. This report will be key in determining whether Canada is keeping pace, or even outpacing US growth at present.”

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