Canadian Dollar Rises on GDP Beat, Exports Flash Warning
Canada 2019 GDP Talking Points:
- Canada GDP rose 0.3% in the month of December, bringing its year over year (YoY) GDP to 1.9%
- The Canadian Dollar has put in a weak start to 2020 as safe haven assets are in the limelight on fears surrounding coronavirus
- Exports fall 5.1 percent annualized, largest drop in 3 years
December GDP Beats Estimates
Canadian GDP crossed the wires at 0.3 percent for the month of December, beating expectations of 0.1 percent. Growth in Canada on a year-over-year basis, now sits at 1.9 percent. The reaction to the Canadian Dollar was modest, with CADUSD moving slightly higher in morning trading to 1.3454 from 1.3434 pre-release.
USDCAD (1-Min Chart)
Growth in Canada remains sluggish to end 2019, with fourth quarter growth printing 0.3 percent. While December was stronger than expected, the first two months of the quarter were impacted negatively by rail disruptions and pipeline shutdowns across the country. However, household spending showed strength with consumer spending up two percent.
Exports gave the largest negative contribution to fourth quarter growth, falling 5.1 percent, the largest drop in three years. Should this slowdown persist into Q1 of 2020 on the back of global economic fears, the Bank of Canada (BoC) may need to weigh pushing real interest rates further into negative territory.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.