• Canadian GDP M/M: 0.0% vs 0.2% exp
  • Fall in Oil extraction a particular concern
  • Canadian dollar handing back some of its recent gains

The final Canadian data release before the Christmas break has come in worse than expected with GDP M/M for October flat. In Y/Y terms the pace of growth remains an impressive 3.5% but given the expectation for a rise the reading itself has weighed on the Canadian dollar a little.

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 The Canadian dollar has fallen back against all of its peers since the GDP miss. Source: xStation

Looking more closely at the composition of the growth, it is apparent that the mining, quarrying and oil & gas sectors were a drag. A chart of oil extraction has exhibited a fairly strong correlation with GDP for the majority of this decade and the sharp decline seen of late could be a warning sign going forward.

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 Oil extraction has dropped sharply in recent months and this could be a drag on growth going forward. Source: XTB Macrobond

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 USDCAD has popped higher by around 70 pips since the data was released and the market remains in a longer term range from 1.2665-1.2915. Source: xStation