Canada releases disappointing GDP data

Canada's economy expanded less than expected in April, raising concerns over the nation's economic outlook. According to Statistics Canada GDP grew by a seasonally adjusted 0.1% against analysts forecast for a 0.2% increase, while on an annual basis the economy expanded 2.1% in April. April growth was supported by wholesale trade, up 1.3% and the retail sector, inching higher 0.8%. However, construction fell 0.6% in April, while manufacturing rose slightly 0.2%. The worse-than-expected data will ensure the Bank of Canada will keep its benchmark interest rate, which is now close to record low of 1%, unchanged until well into 2015, as policy makers look for stronger signs of a global recovery. Meanwhile, the data of the U.S., Canada's major trading partner, showed that the American economy contracted 2.9% in the first three months of the year, adding to signs that the North America's economies have been severely hit by harsh winter weather. However, economists remain optimistic about future growth prospects of the region. 

Following the data release the Canadian Dollar fell from the highest level since January, the first decline in four days. USD/CAD rose 0.26% to trade at 1.0691 compared to 1.0683 ahead of the data. The loonie had a positive month, as gold and oil prices rose on geopolitical issues in Iraq and tensions in Ukraine.