Canadian GDP figures for May came largely in line with Bloomberg News survey expectations. The y/y number came in at +1.6% versus +1.6% expected. The m/m figure came in at +0.2%, slightly below the +0.3% that Bloomberg News survey analysts expected. Canada releases GDP every month and the +1.6% change is an increase over April’s +1.4%.
The slightly bearish Canadian data is in contrast to the strong US GDP data which was released at the same time. US Annualized GDP (QoQ) for 2Q gained +1.7%, above the Bloomberg News survey consensus of +1.0%. While there was a strong downward revision in 1Q GDP from +1.8% to +1.1%, the USDCAD still reacted bullishly.
Recall the strong connection between the US and Canadian economies. The US accounts for roughly 70% of Canadian exports.
Charts Created using Marketscope – prepared by Kevin Jin
The USDCAD is higher by roughly +10 pips following the combination of Canadian and US GDP. The initial reaction was +30 pips but the pair quickly began to retrace.
--- Written by Kevin Jin, DailyFX Research
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