Canadian GDP beat all estimates

This morning’s headline print missed by a wide mark, in fact, not many analysts were in the same ball park. For the month of February, GDP dropped an unhealthy -0.2% after a +0.1% advance in January. This morning’s release leaves the Canadian economy tracking well below Governor Carney’s, at the BoC, quarter release of +2.5%. Growth for the Q1 will likely come in at +2% or less, even if there is a rebound in March. This would imply that the output gap will not narrow this quarter. This will be viewed as a potential u-turn in renewed interest rate hikes that came about after the market got itself all bulled up after the hawkish comments from Carney last week. The Canadian economy has a long ways to go to adhere to the BoC recent forecasts.

Today’s disapproving release can only be bullish for fixed income and negative for the Loonie outright. A currency that has been optioned protected at 0.9800, now has the potential to test the strength of option sellers at the other figure, 0.9900, and at the stronger resistance of 0.9925/40.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell