Further CAD weakness likely

The Canadian economy is headed for a slower end of the quarter, as indicated by disappointing July wholesale trade and retail sales. The mixed signals regarding the resilience of the Canadian consumer put into doubt how supportive consumption might be during the coming months in mitigating the economic slowdown. 

In the current environment of slower-than-expected Chinese growth and falling demand and prices for export commodities, additional downside risks are foreseen in the growth outlook, as China is Canada's second-largest export partner, while capital expenditure in the energy sector and investment falter. 

"As such, additional monetary policy easing will be needed, which so far has not been priced-in by the market. The loonie veiw remains bearish and the forecasts are revised up to 1.35 by end-15 from 1.29, and to 1.41 in a one-year time horizon", says Barclays.

In this light, the release of July's monthly GDP will shed light on the likely depth and length of the current slowdown. More up-to-date data is awaited, as September's RBC Manufacturing PMI will be released.