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THE TAKEAWAY: CAD Gross Domestic Product (YoY) (MAY) > +1.6% versus +1.6% expected, from +1.4% > USDCAD BULLISH

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.

USDCAD 1-minute Chart: July 31, 2013

Canadian_GDP_Mostly_In_Line_With_Expectations_As_US_GDP_Surprises_To_Upside_body_Picture_1.png, Canadian GDP Mostly In Line With Expectations As US GDP Surprises To Upside

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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