According to Statistics Canada, the gross domestic product (GDP) fell 11.6% in April, down from a 7.5% contraction in March. This is the sharpest economic contraction on record, but the key aspect of the report was that economists predicted a 13% decline.
The statistics agency reported that all 20 industrial sectors of the national economy contracted due to the COVID-19 lockdown measures. The leaders were accommodation and food services (-42.4%), transportation and warehousing (-23.1%), retail (-22.9%), construction (-22.9%), and manufacturing (-22.5%).
Researchers anticipate a 3% expansion in real GDP in May due to economies reopening and easing coronavirus restrictions.
On Monday, it reported a 20.2% spike in the value of building permits last month to $7.4 billion. This is up from the 15.4% collapse in April. The industrial product price index (PPI) advanced 1.2% last month, up from the 2.3% slide in April. Raw materials prices surged 16.4% in May, up from the 13.4% decline in the previous month.
The loonie could not find support in energy prices as they traded relatively flat. August West Texas Intermediate (WTI) crude oil futures slipped $0.14, or 0.35%, to $39.56 per barrel. September Brent crude futures shed $0.25, or 0.6%, to $41.60 a barrel. August natural gas futures picked up $0.022, or 1.29%, to $1.731 per million British thermal units (btu).
Energy commodities continue to be Canada’s biggest exports, so any significant change in prices – high or low – can affect the loonie.
The three-year government bond dipped to 0.301%, while the benchmark 10-year bond rose to 0.516%.
As investors exited the greenback due to rising stock indexes, the US dollar took a hit, which benefited the loonie. Since the US dollar is one of the top safe-haven assets, traders were a bit more confident in global financial markets, resulting in weakness in the buck.
The USD/CAD currency pair fell 0.44% to 1.3602, from an opening of 1.3659, at 15:25 GMT on Tuesday. The EUR/CAD tumbled 0.34% to 1.5304, from an opening of 1.5355.
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Read More: Canadian Dollar Strengthens on Better-Than-Expected April GDP — Forex