Canadian Dollar Tumbles as the Canadian Economy Remains Stagnant
- The Canadian economy grew by 3.4% YoY, but remained unchanged on a MoM basis
- Wholesale trade leads the way in growth which is offset by a fall in construction
- USDCAD spikes by 0.75% on lackluster GDP
In Canada, real gross domestic product (GDP) was unchanged in October after growing by 0.2% in September. Year-over-year GDP rose by 3.4% missing the the expected 3.5% growth. In October, only 9 of 12 industries reported expansion. The wholesale trade sector grew by 1.4% in October which more than offset the 0.9% decline in September. Equipment and supplies, personal and household goods, and petroleum exports were the leading subsectors which grew by 3.4%, 3.2%, and 3.1% respectively. This marks the ninth time that the wholesale trade sectors grows in the past eleven months.
Real estate and rental and leasing rose by a lesser margin at only 0.3% in October. Overall activity at the offices of real estate agents and brokers was up by 2.1% was up for the third month in a row. However, the level of activity of this subsector is still below its March 2017 level.
The construction sector fell slightly by 0.1% in October after four consecutive months of growth. Repair construction fell by 0.3% after edging up by 1.6% in September. Similarly, non-residential construction contracted by 0.3%.Residential construction fell -0.1%.
The manufacturing sector grew slightly by 0.1% as the growth in non-durable industries, up 0.3%, was partly offset by a decline in durable industries at -0.1%.Non-durable manufacturing was rose in five of eight subsectors. While durable manufacturing was down slightly as a decline in transportation equipment manufacturing offset growth in seven of ten subsectors. This marks the fourth time in five months that transportation equipment is down (now by -2.4%)
Gross domestic product (GDP) is the headline measure of a country’s economic expansion, or contraction. It is the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production. GDP is a sum of personalconsumption expenditures, gross private domestic
Below is a list of economic releases that has driven the Canadian Dollar higher:
-CAD Gross Domestic Product (MoM) (OCT): 0.0% versus +0.2% expected, from +0.2%
-CAD Gross Domestic Product (YoY) (OCT): +3.4% versus +3.5% expected, from +3.3%
Chart 1: USDCAD 1-hour Chart (December 21 to 22, 2017)
Lackluster economic growth in Canada caused the US Dollar to rally a little over 0.70%. At the time of that this was written USDCAD traded slightly lower at 1.2770 as traders took profits.
--- Written by Dylan Jusino, DailyFX Research
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.