The Canadian dollar rallied against its major peers, though failed to gain on the US dollar, after the Canadian economy rebounded stronger than expected from the previous decline.
Canada’s gross domestic product recovered in February, rising 0.4%, following the slight 0.1% decrease in January. Economists were anticipating a bit slower growth by 0.3%. The report cited following factors contributing to the rebound:
The growth was led by a rebound in the mining and oil and gas extraction sector.
The economic recovery led to speculations that the Bank of Canada may resume interest rate hikes in the near future. Indeed, BoC Governor Stephen Poloz said in today’s speech:
The economic progress we have seen makes us more confident that higher interest rates will be warranted over time, although some monetary policy accommodation will still be needed.
In other news, the headline seasonally adjusted IHS Markit Canada Manufacturing Purchasing Managers’ Index came out at 55.5 in April, little-changed from 55.7 in March.
USD/CAD was at about its opening level of 1.2842 as of 22:09 GMT today after rallying to 1.2914 intraday. EUR/CAD declined from 1.5509 to 1.5406. CAD/JPY advanced from 85.12 to 85.50.
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