First-quarter GDP well above BoC forecast

In the Asian session on Friday (June 2), USD/CAD fell to 1.3446, a drop of 0.03%. Canada’s GDP data released yesterday showed that the country’s economy remains strong.

The latest from the Bank of Canada:

The stronger-than-expected GDP in the first quarter was also much higher than the Bank of Canada expected. Monthly data showed that economic activity was better than expected in March, and there are tentative signs that activity will do well in April. This should tilt risks more clearly towards our forecast that the Bank of Canada justifies another 25bp rate hike. Strong economic data and a recent narrowing of the US/Canadian interest rate spread should help contain the loonie’s weakness and give the loon a bit of a boost in the short term.