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    Canada’s monthly GDP forecast for October shows a decrease of 0.3%

    by VT Markets
    /
    Dec 23, 2025
    Canada’s Gross Domestic Product (GDP) for October has been released, showing a 0.3% decline from the previous month. This result matches analysts’ predictions and reflects the current economic situation in Canada.

    Impact Of Economic Indicators

    Economic indicators, like GDP, help us understand how well the economy is performing. They influence important decisions about monetary policy and investment strategies. The market plays close attention to these numbers, especially with global economic challenges and local changes. This match with forecasts brings some reassurance to those watching Canada’s economy. The October GDP drop of -0.3%, while anticipated, highlights the ongoing slowdown in the Canadian economy. This trend is backed by the recent increase in the unemployment rate to 6.2%, reported for November. It suggests that the Bank of Canada will rely heavily on signs of continued economic weakness. As a result, we should prepare for potential interest rate cuts. The Bank of Canada might be nearing the end of its current strict policy, especially with core inflation dropping to 3.2% last month. Options strategies on the Canadian Overnight Repo Rate Average (CORRA) futures could be a good way to bet on a more cautious approach in the first half of 2026. This feeling is growing as we move into the new year.

    Impact On Canadian Dollar

    The slowdown in the economy, along with lower Western Canadian Select oil prices around $65 a barrel, is putting downward pressure on the Canadian dollar. This trend is evident in the USD/CAD exchange rate, which has risen from 1.3700 to nearly 1.3900 over the past month. It may be wise to consider derivative plays that short the loonie, such as buying USD/CAD call options. Implied volatility on Canadian assets may stay low in the short term, as this GDP figure met expectations without causing any surprises. However, we expect volatility to increase as we approach the Bank of Canada’s next meeting in late January 2026. Additionally, the usual low liquidity during the holiday season might amplify market movements in the coming days. Create your live VT Markets account and start trading now.

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