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Canadian GDP Rises at the Fastest Pace in Two Years

Benjamin Spier

Talking Points:

  • Canada GDP rises at the fastest pace in two years
  • BoC predicts 1.8% growth in 2013
  • USD/CAD continues trading below 1.0300

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The Canadian economy expanded by the fastest pace in two years in July and matched the largest expansion rate in three and a half years. The gross domestic product was reported 0.6% higher on a monthly basis, beating expectations for a 0.5% expansion and an improved release following the 0.5% GDP decline reported in June, which was the biggest monthly contraction since 2009. The economy expanded 1.4% since July 2012, according to Statistics Canada.

In July, the Bank of Canada said the economy will be choppy in the near term, but the central bank raised its growth forecast to 1.8% for 2013, up from a previous forecast of 1.5%. The BoC has kept the target interest rate at 1% since September 2010, and although growth expanded significantly in July, the 1.1% inflation rate reported in August was well below the bank’s 2.0% inflation target.

The Canadian dollar did not significantly respond to the GDP release, as it was only slightly above expectations and markets remain focused on US related headlines, like the potential government shutdown and the possibility of a Fed taper in October. USD/CAD fell below 1.0300 following the weekly open, and the pair may continue to see resistance around 1.0311, where it opened two weeks ago after a significant weekend gap.

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USD/CAD Daily: September 30, 2013

Canadian_GDP_Rises_at_the_Fastest_Pace_in_Two_Years_body_Picture_1.png, Canadian GDP Rises at the Fastest Pace in Two Years

Chart created by Benjamin Spier using Marketscope 2.0

-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to bbspier@fxcm.com .

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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