Canada: Growth returns with domestic support – RBC

💡 DMK Insight

Canada’s GDP rebound forecast could shift market sentiment, especially for CAD-denominated assets. With RBC projecting a 1.7% growth in Q1 2026 after a contraction, traders should keep an eye on how this impacts the Canadian dollar and related markets. A stronger CAD could affect commodities priced in CAD, like oil, and influence forex pairs such as CAD/USD. If the GDP growth materializes, it might lead to speculation about potential interest rate hikes, which could further strengthen the CAD. However, there’s a flip side: if the growth doesn’t meet expectations, we could see a quick reversal in sentiment. Watch for key economic indicators leading up to Q1 2026, particularly employment rates and inflation data, as these will provide insight into whether the GDP forecast is on track. The immediate focus should be on how traders react to this news, especially in the forex market, where volatility could spike around the announcement dates.