The Canadian economy squeezed by 0.1% in Jult, the first month of Q3. While the figure came out within expectations, it’s a warning sign for Canada’s biggest trade partner – the USA.
Canada is unique in releasing GDP figures on a monthly basis, rather than once a quarter. After excellent growth first quarter, and an OK second quarter, the fist month of July saw a squeeze.
The first monthly contraction in a year  wasn’t too bad – 0.1% is quite minimal. The economy saw weakness in manufacturing, construction and retail. The chances of a pause in rate hikes grew.
As this result was expected by economists, the Canadian dollar enjoyed the publication – USD/CAD dropped from 1.03 to 1.0230, piercing below the minor 1.0280 support line. The greenback continues to suffer across the board.
More levels below: 1.02, 1.01 and parity. Above – 1.0350,1.05 and 1.0680.
Worries in the US
This is also a sign for the greenback. One of the main reasons for Canada’s weakness is low demand from the US, Canada’s big neighbor. As the US releases GDP only on a quarterly basis, there’s still quite some time until the US will release the initial estimate for its Q3 GDP.
The US had a slow second quarter, with a 1.7% growth rate. This was slightly upgraded today from the previous estimation of 1.6%. The figures published in the US during August were bad. During September,the releases were somewhat better, but there’s still a good chance of contraction in Q3 – a double dip recession.
Even if the US continues to enjoy growth in Q3, it’s highly likely to be slow – too slow for stirring the terrible job market in the US. Too slow to lift the price of homes.
Want to see what other traders are doing in real accounts? Check out Currensee. It’s free..
