An upbeat report out of Canada


The Dollar was little changed following the data where personal income came in as expected, though consumption missed the mark. EURUSD ticked a few points higher to 1.1656, USDJPY was steady on either side of 110.70. USDCAD on the other hand broke below today’s low and S1 at 1.3209 following the better than expected Canadian GDP figures.

Canada GDP grew 0.1% in April after the 0.3% rise in March, with the improvement in growth during the month contrasting with the risk of a flat reading or decline implied by the related month reports. Goods producing industries saw a 0.2% gain, driven by a 0.8% bounce in manufacturing shipment volumes. Petroleum and coal product shipments fell 18.6%, due to partial shutdowns at a number of refineries across the country for maintenance work, says Statistics Canada. Service sector output was little changed, as a 1.3% drop in retail trade was offset by gains across many other sectors. Poor weather likely played a role in the retail drop, and is implicated in the 0.5% drop in construction.

This is an upbeat report that underpins the expectation that Bank of Canada will deliver a 25 bp rate hike in July.

Nevertheless, US personal income rose 0.4% and spending was up 0.2% in May with the latter a little light versus expectations. The PCE chain price index was up 0.2%, as was the core, following 0.2% gains for both in April. Annually, the headline price index rose to a 2.3% y/y pace versus 2.0% y/y, with the core rate at 2.0% y/y from 1.8% y/y.

The price data, the Fed’s preferred measures, have reached the 2% y/y goal, but that’s in line with expectations and won’t alter the pace of normalization.


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Andria Pichidi

Market Analyst


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