"We have been seeing that October proved to be a stronger month in terms of manufacturing shipments, and wholesale … it will be quite a good month for GDP"
- Andrew Grantham, CIBC World Markets economist
The Canadian Dollar inched higher versus its American counterpart, advancing 0.34% to 1.0596 following the report from Statistics Canada, showing the economy posted stronger-than-expected growth in October. The homeland of the maple leaf expanded 0.3% to $1.60 trillion in October, from a 0.1% growth in the previous month and above analysts' forecasts for a 0.2% expansion. The latest data backs Bank of Canada's outlook that the world's 11th largest economy is recovering moderately. On a yearly basis, growth stood at 2.7%, following a 2.3% in September. The main upside pressure came from manufacturing sales, which advanced 1.3%. Another strong contributor to GDP was the service sector, which registered stable growth mostly due to wholesale trade.
Despite stronger growth, the Canadian Dollar is likely to lose ground versus its major peers as Canadian central bank claimed rates will remain on hold for some time, since policy makers assessing risks of a sharp correction in property value against the threat of subdued inflation. Therefore, there is a risk of further rise in property prices that can pose a risk to both the economy and financial system, according to BoC Governor Stephen Poloz. Hence, even taking into account positive trends in manufacturing and some other sectors, risks for the recovery are high, hence the central bank will continue monitoring each fundamental report.
© Dukascopy Bank SA