Canadian GDP is a clear sign that rates will need to come down next year – CIBC

<p>Today's advanced reading on GDP suggested a flat reading for Q3 following a slight contraction in Q2. That's much softer than the Bank of Canada's forecast for +0.8% GDP growth</p><p>Goods-producing industries have been in decline for five consecutive months, with agriculture notably down due to dry conditions in Western Canada​ and CIBC warns that could understate strength in the economy.</p><p>Overall though, they think the Bank of Canada is done hiking and will increasingly tilt towards rate cuts.</p><blockquote>While Q3's weakness can be partly chalked up to the decline in agricultural production and
fire/strike disruptions early in the quarter, the underlying trend of consumer spending also appears very weak with retail
sales declining and the post-pandemic recovery in accommodation and food services stalling. The fact that this weakness is
happening at a time when population growth has been so strong, and before the majority of homeowners have yet to be
exposed to higher interest rates, is a clear signal that rates will have to come down next year to avoid an even worse
outcome (we currently expect the first move lower in Q2 next year).</blockquote><p>USD/CAD hit a one-year high today and I suspect it has much further to go.</p>

This article was written by Adam Button at www.forexlive.com.