Summary:
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Canadian Q3 GDP +2.0% as expected
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Consumption grows at slowest pace in over 2 years
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Fairly muted reaction in USDCAD; remains near 1.33
This afternoon the new trade treaty between the US, Mexico and Canada has been signed by the respective presidents who are in Argentina for the G20 summit. Trump has claimed that he doesn’t expect there to be much of a problem ratifying the deal while Canadian PM Trudeau stated that the new agreement lifts economic uncertainty. Trudeau did say that himself and Trump needed to keep working to end steel/aluminium tariffs but overall this was largely ceremonial and had little market impact.
With the Lion’s share of the focus amongst traders on any comments coming from Buenos Aires today - not so much on the USMCA but a US-China trade truce - it is easy to overlook the latest growth figures from North America. The Canadian economy expanded by 2.0% in annualised terms in the 3rd quarter, in line with expectations and down a little on the 2.9% seen in the previous quarter. In terms of the breakdown there was a worrying fall in consumption which rose by just 1.2% which is the slowest pace in more than two years.
Growth in Canada slowed down a little as was expected in the 3rd quarter, with GDP dropping to 2.0%. More worrying is the fall in consumption (household) which fell to a 2-year low. Source: XTB Macrobond
Due to its lagging nature, GDP releases often don’t cause huge waves in the markets and this has been the case for the Canadian dollar this afternoon. Looking at the daily chart the USDCAD pair is once more at a intriguing level with price not far from the June high of 1.3385. Price has moved back above the 1.33 handle today but the market has already shown some resistance around here and if it can’t make a clean break higher then the trend channel in place for the past couple of months could see another test of its lower bound.
The USDCAD has found some resistance around the recent peak of 1.3385 and this may prove a significant hurdle to overcome. The market remains in a rising trend channel with the lower bound currently around 1.3220. Source: xStation
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