Forex News – Canadian dollar tumbles on weak GDP data

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The Canadian dollar tumbled against the U S dollar following disappointing GDP data that showed Canada’s economy unexpectedly shrank in February, following modest 0.1 percent growth in January.

USDCAD jumped 35 pips immediately after the data at 8:30 am New York time, to hit a high of 0.9863.

Statistics Canada reported that GDP contracted by a seasonally adjusted 0.2 percent in February, contrary to  expectations for growth of 0.2 percent.

On an annual basis, Canada’s GDP expanded at an annualized rate of 1.6 percent in February, lower than the forecasted 2.1 percent increase, following growth of 1.7 percent in the previous month.

The main driver behind the slowdown in GDP was due to the temporary closures of some mines and their maintenance issues. The mining sector is a major sector in the Canadian economy.

Potash mining fell by 19 percent after weak world demand prompted the closure of mines in Saskatchewan. Copper, nickel, lead and zinc mining fell by 9.9 percent as several nickel mines in Ontario were shut for safety reasons.