First Quarter Growth Disappointment Drives the Canadian Dollar Lower
Talking Points:
- Canadian Q1 GDP growth lowest in 5 quarters
- BoC predicted weaker first quarter growth because of weather
- USD/CAD rises 20 pips on disappointing GDP
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|
Canada Gross Domestic Product |
Actual |
Expected |
Prior |
Revised Prior |
|
Quarterly GDP Annualized (Q1) |
1.2% |
1.8% |
2.9% |
2.7% |
|
GDP M/M (March) |
0.1% |
0.1% |
0.2% | |
|
GDP Y/Y (March) |
2.1% |
2.3% |
2.5% |
2.3% |
The Canadian economy suffered the worst quarterly growth in over a year, according to Statistic Canada’s release of gross domestic product for the first quarter of this year. The 1.2% economic expansion also disappointed expectations and the growth rate in the final quarter of 2013 was also revised lower.
Bank of Canada Governor Poloz had already predicted in March that growth in the first quarter will be weak because of weather conditions. In April, the BoC revised lower its growth forecast for 2014 to 2.3% and the 2015 growth projection was held at 2.5%. The BoC remained neutral on the direction of its next rate move in the April meeting, and the disappointing data may have already been factored into the BoC’s projections.
However, the Canadian Dollar still lost over 20 pips against the US Dollar in Forex markets on the weaker than expected data.
USD/CAD 1-Minute: May 30, 2014
USD/CAD may next find resistance by the weekly high at 1.0886. Currency Strategist Ilya Spivak says a USD/CAD reversal above a key Fibonacci level at 1.0850 targets the 1.0880-85 zone.
USD/CADDaily by Ilya Spivak
Charts created by Baruch Spier and Ilya Spivak using Marketscope 2.0. Add DailyFX Support/Resistance to your charts at FXCM Apps.
-- Written by Baruch Spier, DailyFX Research. Feedback can be sent to [email protected] .
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