Last week, the CAD underperformed relative to most of its peers, in part due to a low reading of April's monthly GDP. The contraction in economic activity was influenced mainly by the oil and mining sector, which contracted by 2.6%.



Despite the long-lasting effects of the 2014 oil shock, the BoC reluctant to cut rates in the near term due to financial stability considerations and a somewhat improved economic outlook since the beginning of the year.



The CAD to underperform the USD, especially during the second half of the year, the BoC will lag the Fed's normalization process, given that Canada's output gap is closing more slowly and the outlook around investment will probably remain weak.



The data-relevant release this week is the publication of June's employment report, which should shed some light regarding recent economic activity, after Canada created almost 60k jobs during May, way above the YTD average of 15k. Markets will follow closely economic developments to assess the next move of the BoC.