CAD Falls on Monthly GDP Miss

Thursday, August 30, 2018

 

Canadian monthly GDP was flat (0.0%) in June versus expectation of a 0.1% gain. Even though quarterly GDP grew at an annualized 2.9% markets are selling the CAD and it has fallen versus most currencies. Much of this growth was driven by an increase in Canadian exports led by the energy sector. There are no top tier economic releases until next week’s Bank of Canada meeting Wednesday. Risk still lies with NAFTA discussions and markets will be watching headlines closely.

 

The US dollar is trading slightly higher on elevated international equity risk following comments by Trump on China. Core PCE, personal spending, and unemployment claims all were at expectation and are not having a meaningful impact. Much like Canada, markets will be watching NAFTA and international trade deal progress over the long weekend for further USD direction.

 

The Euro is trading sideways after German consumer price index rose 0.1% indicating some upwards inflation pressure in the large Eurozone member. Spanish CPI was also at expectation of 2.2%. On the trade side, there was comments from the EU of an offer to drop tariffs on industrials goods with the USA if they do the same.

 

Equities are mixed this morning: the Dow down 0.25%, the S&P down 0.09%, NASDAQ up 0.08% and the TSX up 0.24%. Crude Oil is up 0.53% ($69.87) while Gold is down 0.40% ($1,206.60).

 

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