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USD/CAD Moves Higher as Canadian GDP Unexpectedly Declines
Published October 31, 2017
Economic data releases out of Canada this morning showed that month-on-month Canadian GDP declined by -0.1% versus growth expectations of 0.1%; raw material prices and price of goods sold by manufacturers experienced similar declines.
This drop in GDP mostly resulted from a sharp slowdown in manufacturing, mining, quarrying, and oil and gas extraction in Canada; losses from these sectors outweighed the growth experienced in 12 out of 20 other sectors of the Canadian economy.
Raw material prices experienced a sharp decline in growth mostly due to lower prices for motorized and recreational vehicles, meats, fish and dairy products; higher energy prices helped offset this decline in growth.
USD/CAD is hovering near 1.2900 as the market continues to weigh this relatively poor economic data against comments from the Bank of Canada; BoC Governor Stephen Poloz iterated that his central bank will be largely focused on Canadian economic data going forwards.
Stephen Poloz is set to speak before the House of Commons Standing Committee in Ottawa at 3:30 PM EST; investors will look for clues on Poloz’s guidance on monetary policy in light of today’s data release.
The US Federal Reserve kicked off their 2-day policy meeting today; this meeting will have a smaller impact as the Fed is expected to keep rates the same and investors are more focused on US President Donald Trump’s pick for the next Fed chair on Thursday.
US politics slightly moved market sentiment to risk-off territory as developments in the Trump-Russia probe unfolded; two members of Trump’s election campaign, including a former campaign manager, received a litany of charges relating to fraud and conspiracy against the United States.
Inflation out of the euro zone slowed more than expected this morning, lending credence to the European Central Bank’s decision to show increased caution in monetary tightening; political strife in Spain is beginning to subside as Catalan separatist leader Carles Puigdemont fled to Belgium in the wake of Spanish control of Catalonia.