Summary:
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Canada GDP Q/Q: +0.4% vs 1.0% exp
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Slowest since Q2 2016
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Canadian dollar falls across the board in response
The most recent GDP figures from Canada have painted a pretty bleak picture of growth and weighed on the Loonie. For December, in Y/Y terms GDP came in a +1.1% vs +1.4% exp, while on a M/M basis it was -0.1% vs 0.0%. An annualised Q/Q reading shows the bigger picture, and this is arguably where the biggest disappointment came, with a large fall to +0.4% from +2.0% prior. This was also well below the expected reading of +1.0%.
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Not only did the overall growth figure slowdown, but the sharp drop in gross fixed capital formation (GFCF) is a particular concern. Source: XTB Macrobond
With Canadian growth the standout data point scheduled for 1:30PM, any traders who took a long lunch will have missed a big chunk of the action as an error by statistics Canada saw the figures released around 25 minutes early. This administrative error which saw the figures published early on the Statistics Canada website, coupled with the weak nature of the data has caused a sizable move lower in CAD in the last hour, with a fair chunk of it actually coming ahead of the scheduled release time.
Several traders pounced on the soft data early due to the admin error and USDCAD has moved firmly higher since. Source: xStation
It had been a bit of a mixed week for USDCAD on the whole but the strong positive reaction to this data has seen price move firmly higher and is now probing the weekly highs around 1.3240. Long term the market appears to remain in a downtrend according to the D1 Ichimoku cloud. Source: xStation
