The Canadian economy grew by only 0.1%, weaker than 0.2% that was expected and weaker than April’s growth rate of 0.3%. Canada is unique in publishing GDP data on a monthly basis.
The Canadian dollar, which was already close to parity with the greenback, retreated and is now struggling with resistance, which is quite close.
Despite the weak growth, the situation in Canada remains positive. Recent job reports showed that unemployment remains low. The Bank of Canada is talking about rate hikes in the future (not too close) while many other developed countries are considering more monetary stimulus.
The accompanying Raw Materials Price Index fell by 4%, much lower than a fall of 1.5% that was expected. The Industrial Product Price Index also released by Canada fell by 0.3%, worse than a rise of 0.6% that was predicted. These second tier figures also push the loonie lower.
USD/CAD opened the week lower and gradually moved towards parity. It hovered above these levels in the hours before the publication, but then went back up. It is currently capped by the 1.0030 level. 1.066 is stronger resistance.
See more about the loonie in the Canadian dollar forecast.