Canada's economy grew by 0.2% in February, slightly lower than the 0.4% growth markets had expected and weaker than January's 0.5% rise.
A closer look shows that service-producing industries led increases for the second month in a row thanks to growth in transportation and warehousing. Meanwhile, commodity-producing industries were unchanged, with gains in mining, quarrying and oil and gas extraction offset by contractions in the utilities and manufacturing sectors.
Advanced indicators suggest that GDP was “basically unchanged” in March, as increases in utilities, real estate and rents were balanced by weaknesses in manufacturing and retail.
Given the “unchanged” GDP outlook for March, Statistics Canada reports that Canada's economy expanded 0.6% in the first quarter of 2024, much faster than the 0.6% increase in the fourth quarter of 2023.
Link to Canada's February GDP report
Market reactions
Canadian dollar Against major currencies: 5 minutes
Overlay of the Canadian dollar against major currencies Chart by TradingView
The Canadian dollar traded as a counter currency in the run-up to Canada's GDP release, rising against the yen, Australian and New Zealand dollars but struggling against the dollar, euro, pound and Swiss franc.
The Canadian GDP release coincided with a stronger-than-expected labor cost index from Uncle Sam. This event not only caused the US dollar to rise against its foreign currency counterparts such as the Canadian dollar, but it also led to a decline in crude oil prices and potentially increased the vulnerabilities of the Canadian dollar.
Despite this, the Canadian dollar capped the day in the green against currencies such as the Australian dollar, New Zealand dollar, and safe havens such as the Japanese yen and Swiss franc, while it ended the day lower against the euro, British pound, and US dollar.
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