Canada’s GDP Shrinks, Canadian Dollar Unfazed

Canada’s economy shrank at the start of the current year as was demonstrated by today’s report from Statistics Canada. Yet in a surprising display of resilience the Canadian currency jumped after the report instead of falling.

Canadian gross domestic product fell 0.1 percent in January after rising 0.3 percent in December. It was not a good reading yet the Canadian dollar jumped sharply after the economic release. The possible reason for such behavior is that market participants anticipated a bigger drop by 0.2 percent.

The loonie’s resilience was even more puzzling considering that crude oil demonstrated substantial losses today. It looks like the Canadian currency decided to completely ignore fundamentals during the current trading session.

USD/CAD was up from 1.2679 to 1.2783 intraday but retreated to 1.2671 as of 20:27 GMT today. CAD/JPY demonstrated similar pattern, bouncing to 94.70 after falling from 94.69 to 93.74 earlier. As most other currencies, the Canadian dollar gained on the euro, and EUR/CAD sank from 1.3735 to 1.3617.

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