Canada\u2019s GDP rose 0.2% in February. Both goods-producing and services industries contributed, as earlier auto-sector disruptions eased.<\/p>\n
The advance estimate for March GDP was essentially unchanged. Early indicators suggest growth carried through to the end of Q1, though the estimate may be revised.<\/p>\n
For Q1, GDP is tracking slightly above a forecast of 1.3% annualised growth. It is also tracking slightly above the Bank of Canada\u2019s 1.5% projection in its April Monetary Policy Report.<\/p>\n
With population growth slowing, per-capita improvement is expected to continue. The outlook presented is for the Bank of Canada to keep interest rates unchanged through 2026.<\/p>\n
The Bank of Canada has said it is monitoring underlying inflation measures excluding energy. It is also watching broader growth effects linked to higher energy costs tied to the conflict in the Middle East.<\/p>\n
We’re seeing continued resilience in the Canadian economy with the 0.2% GDP growth for February and a steady outlook for March. This steady, albeit moderate, expansion reinforces the view that the Bank of Canada will remain on the sidelines. The likelihood of a rate cut in the near term is diminishing.<\/p>\n
The latest CPI data for March showed core inflation remains persistent at 2.7%, well above the Bank’s 2% target. This stickiness justifies the central bank’s cautious stance, as they signaled they are watching underlying inflation closely. Any derivative positions betting on imminent rate cuts are looking increasingly risky.<\/p>\n
A solid labour market report, which showed Canada adding 35,000 jobs in March and keeping the unemployment rate at 5.5%, further dampens the case for easing. We remember how the market was pricing in rate cuts for the first half of this year back in late 2025. That expectation has now been almost entirely priced out.<\/p>\n
With the central bank expected to hold rates steady through the summer, implied volatility on interest rate derivatives like CORRA futures should decline. This environment favours strategies that profit from stability and time decay, such as selling straddles. Traders might find collecting premium more profitable than betting on a big directional move.<\/p>\n
We see a potential policy divergence with the United States, where recent inflation data has been softer, increasing the odds of a Federal Reserve rate cut. This contrast supports a stronger Canadian dollar against the greenback in the medium term. Consequently, bullish positions on the CAD through futures or options appear attractive.<\/p>\n","protected":false},"excerpt":{"rendered":"
Canada\u2019s GDP rose 0.2% in February; Q1 growth slightly above forecasts; Bank of Canada rates steady.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-46309","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/46309","targetHints":{"allow":["GET","POST","PUT","PATCH","DELETE"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=46309"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/46309\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=46309"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=46309"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=46309"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}