• Canadian GDP Q/Q (annualised) +1.7% vs 2.0% exp
  • First half of 2017 GDP 4.2% falls to 1.6% in second half
  • CAD extends declines after already trading lower on trade war talk 

 The most recent growth figures from Canada have come in worse than expected and the trend appears to be one of a slowdown. In annualised terms the Q/Q GDP for the final quarter of 2017 came in at 1.7%, well below the 2.0% expected. This means that from a Y/Y perspective the GDP growth was 3.3% – in line with the consensus expectations. 

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 The latest GDP figures have shown a bit of a slowdown, dropping to 1.7% Q/Q in annualised terms. Source: XTB Macrobond

There was some upwards revisions to the prior data with the first half of 2017 now believed to have shown 4.2% growth, from a previous estimate of 4.0%. The second half of the year showed a fairly dramatic drop in growth with the 6 months now projected to have seen 1.6% growth.  

Further details of the data release are as follows:

  • Goods production -0.1% m/m
  • Services production +0.1% m/m
  • Implicit price index +1.2% q/q
  • Q4 consumption was slowest pace since 2016
  • Inventories cut 0.7 pp from growth
  • Trade cut 1.1 pp from growth

The Canadian dollar has come under pressure following the release and the Loonie was already lower on the day on the latest talk of the US pursuing a trade war. The biggest gainer against CAD today is the Swiss France, but all 7 crosses involving CAD show the currency to be depreciating on the day. 

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 CAD is moving lower across the board on the soft data and also talk of US-led trade wars. Source: xStation

The USDCAD surged higher yesterday to trade at its highest level since December, peaking just short of the 1.29 handle. The pair is now back at a potentially key resistance level with the region around 1.2910 previously providing a ceiling to the market on several occasions. Thursday’s candle showed some selling from this level with a Doji forming but today the market has looked to retest the highs once more. 

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 USDCAD has rallied in recent sessions and is now retesting a key prior resistance zone around 1.2910. Source: xStation