USD/CAD likely to reach 1.40 in coming months

This week's data releases will probably set the mood for BoC's meeting on September 9. The resilience of the Canadian consumer, together with satisfactory readings for inflation, is in line with the rhetoric of the BoC, which expects consumption and the non-energy sector to support the economy.

However, weakness in manufacturing, which so far has failed to capitalize on a weaker looney, faltering global demand, and continued feebleness in oil prices, could continue to hurt the Canadian economy. 

"Commodity prices are expected to remain under pressure as uncertainty about China prevails. As such, the USD/CAD is expected to reach 1.40 in the months ahead and would view any dip toward 1.3200 as a buying opportunity", says Barclays.
 
The release of the current account balance (Monday) and international merchandise trade (Thursday) will shed light on the strength of non-resource exports. In addition, a better picture will be shown on the state of real activity with the release of Q2 GDP and June's monthly GDPon Tuesday. Finally, unemployment data is due on Friday.