Canada: GDP data holds no bearing for the CAD – TDS

The Canadian economy began 2020 on a somewhat tepid note, with industry-level GDP rising by 0.1% against expectations for a 0.2% increase, economists at TD Securities brief.

Key quotes

“Industry-level GDP growth was slightly weaker than expected at 0.1% (TD/ market: 0.2%) in January with output higher in 12 of 20 industries.”

“This data point was lost on the CAD as it should. More importantly, however, the CAD is uniquely positioned to suffer. The loonie has an added drag from oil terms of trade shock, which leaves the CAD a strategic sell.”

“We continue to look for topside in USD/CAD. We are also tactically short CAD/JPY as this week's US data should start to show the early stages of an economic catastrophe, which we think will weigh on risk sentiment.”