Canadian dollar loses strength as Statistics Canada announces a 0.1% decline in monthly GDP

Statistics Canada announced the monthly Gross Domestic Product (GDP) report on Monday. Recording worse than expected figure, the economic data fueled an upward rally in USD/CAD currency pair.

As per the report, Canada’s GDP dropped by 0.1% in October. In a previous estimate, analysts had expected the government agency to announce no change in monthly GDP (0%) in October. While the drop was only moderate, it marked the first time for Canada in the past eight months that it printed a negative figure monthly GDP.

Services Sector Helped Offset The Decline In Goods Producing Industries

The report further added that goods-producing industries noted a 0.5% drop in October that marked the second month for such industries to have recorded contraction. Industries that produce services, on the other hand, remained unchanged as the rise in the majority of sectors was evened out by the decline in retail and wholesale trade. All in all, the report highlighted 13 of the industrial sectors out of a total of 20 noted growth in October.

The Canadian dollar lost strength in the forex market following the monthly GDP report. The USD/CAD pair is currently trading around 1.3175 that marks around 0.20% gain for the day.

In terms of year over year growth, however, Statistics Canada reported the country’s GDP to have expanded by 1.2% in October. The 2.0% hike in the services sector was cited as more than sufficient to offset the 1.1% decline in the goods sector.

According to the analysts, on an annualized basis, Canada’s GDP may even decelerate further down to 1% in the fourth quarter. Even after the deceleration, however, the country would be able to hit its target of 1.7% for the annual GDP growth this year.

Other Economic Data To Have Weighed On Canadian Dollar On Monday

The monthly GDP wasn’t the only economic data that weighed on Canada’s economy on Monday. Canada’s census bureau also announced the monthly durable goods orders earlier today. As per the report, the durable goods orders declined by 2% in November. In a previous estimate, analysts had expected a 0.2% increase in durable goods orders. Having missed the analysts’ target, the data further weighed on the Canadian dollar in the forex market.

In terms of monthly “core” durable goods orders, the census bureau announced no change (0%) as compared to last month. The analysts’ forecast for core durable goods orders in November, however, was recorded at 1.5%. The figure for both economic data in the previous month (October) was printed at 0.5%.