Canadian GDP fell much worse than expected indicating the economy contracted in May by the fastest pace in two years due to a slump in the mining and gas industries.
Statistics Canada’s report indicates GDP dropped by 0.3 percent in May CAD1.26 trillion (USD1.32 trillion) on a seasonally adjusted basis, after remaining flat in April, but economists had forecast growth of 0.1 percent.
Meanwhile, at the same time, U.S. GDP data were released, much lower than expected as well, at a 1.3 percent annual rate despite expectations for a 1.8 percent increase.
Both country’s GDP data took a toll on the Canadian Dollar, which plummeted against the U.S. Dollar right after the news. USDCAD jumped over 80 pips from the pre-new level of 0.9508 to 0.9589 within 30 minutes.
Crude oil, Canada’s largest export and influence of the loonie, declined to USD 94.94 after the news.
The focus is now on the U.S. debt ceiling talks, which could have a huge effect on the Canadian Dollar, which in the past few days has already been declining due to Moody’s threat of a U.S. rating downgrade and the deadlock in Congress over the U.S. deficit.