Statistics Canada reported on Friday that real GDP grew by 2.6% year-on-year in the third quarter of 2025, which means:
→ a significant beat compared with analysts’ expectations of just 0.5% year-on-year growth;
→ Canada avoided a technical recession (two consecutive quarters of contraction) following a 1.8% decline in the previous quarter.
The release triggered a strong rally in the Canadian dollar, as markets may have concluded that the Bank of Canada has less need to support the economy with additional liquidity, making the loonie more attractive to hold.
On the other hand, the unexpected GDP rise may partly be a statistical artefact linked to calculation methodology and the impact of tariffs introduced into global trade by the Trump administration. It is possible that GDP grew due to falling imports — meaning that even with strong headline numbers, the underlying economy may remain fragile.
Technical Analysis of USD/CAD
On Friday, the USD/CAD rate fell to its lowest level in a month.
The price then rebounded (as shown by the arrow) from the lower boundary of the channel that has been in place for most of the autumn. This bounce not only confirmed the relevance of the channel but also highlighted strong buying interest around 1.3940.
But should the bulls feel confident?
Note that:
→ throughout November, the price repeatedly slipped below 1.4000 — and each time failed to consolidate beneath this psychological level;
→ Friday’s bearish breakout looked exceptionally strong, with wide bearish candles closing near their lows, signalling clear dominance by sellers;
→ the 50% retracement of the A→B impulse sits near 1.4000.
Given these factors, it is entirely possible that 1.4000 will act as resistance in the short term, and that bears will attempt to resume the downward trend in USD/CAD.
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