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Canada’s economy grew by 0.2% in February, a bit under the 0.4% growth that the markets had expected and weaker than January’s 0.5% uptick.

A closer look shows that service-producing industries led the increases for a second month in a row thanks to transportation and warehousing growth. Meanwhile, goods-producing industries were unchanged as gains in mining, quarrying, and oil and gas extraction was offset by contractions in the utilities and manufacturing sectors.

Advanced indicators point to GDP being “essentially unchanged” in March as increases in utilities and real estate and rental and leasing are balanced by weaknesses in manufacturing and retail trade.

Given the “unchanged” predictions for March’s GDP, Statistics Canada is suggesting that Canada’s economy expanded by 0.6% in Q1 2024, much faster than Q4 2023’s 0.6% increase.

Link to Canada’s February GDP report

Market Reactions

Canadian dollar vs. Major Currencies: 5-min

Canada’s GDP Data Showed Slower Growth in February, ”Unchanged” GDP in March

Overlay of CAD vs. Major Currencies Chart by TradingView

The Canadian dollar was trading as a countercurrency leading up to Canada’s GDP release, gaining against the yen and the Australian and New Zealand dollars but struggling against the dollar, euro, British pound, and Swiss franc.

The release of Canada’s GDP coincided with Uncle Sam’s stronger-than-expected employment cost index. Not only did the event bump USD higher against FX counterparts like CAD but it also dragged crude oil prices lower and likely added to CAD’s weaknesses.

Despite that, CAD capped the day in the green against comdolls like AUD and NZD and safe havens like JPY and CHF while ending the day lower against EUR, GBP, and USD.

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