What you need to know:
1
The Canadian economy is experiencing a combination of major supply and demand shocks which will depress potential economic growth in 2026.
2
As a result, investors will have to recalibrate their definition of “good/strong” growth and “bad/weak” growth.
3
This is important because the Bank of Canada uses an output gap framework to help set monetary policy.
4
A low bar for potential growth will make it less challenging to close the output gap.
5
If RBC’s above-potential-growth forecast materializes, it could bring forward expectations around the timing of rate hikes and impact the Canadian dollar.
For the trading range:
USD/CAD
Buyers
1.3600/1.3700
Sellers
1.4000/1.4100
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