Canadian Dollar Falls as GDP Slowdown

CAD

The Canadian Dollar underperformed against its major counterparts on Tuesday, also tracking a cautious deterioration in risk appetite. At one point, the S&P 500 was down about 0.6% before trimming some of its losses. USD/CAD inversely tracks stock markets. Interestingly, the Loonie was unable to capitalize on a strong performance in crude oil prices.

At 13:30 GMT, the latest Canadian GDP figures crossed the wires. Annualized quarterly growth clocked in at 2.9%, which was far greater than the 1.5% outcome. However, GDP was 0.1% m/m in September, in-line with expectations.

Meanwhile, August’s output was revised higher to 0.3% m/m from 0.1%. In effect, Canadian growth slowed, opening the door to a less aggressive Bank of Canada.

In the context of daily moves since the beginning of 2020, USD/CAD’s 0.7% rise on Tuesday was about 1.34 standard deviations from the average. Using a cumulative distribution function, the probability that CAD weakens by 0.7% or more is at least about 10%. Granted, past performance is not necessarily indicative of future output.

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