Canada's economy did not grow at all in August. Statistics Canada published the data on October 30. Real GDP by industry remained at July's level, although the market expected an increase.
This is the second zero in a row. The preliminary estimate for September is already negative. Such an estimate is based on incomplete data and is revised later.
This matters to traders because of the rate. A weak economy is an argument for the Bank of Canada to ease policy. The Canadian dollar's exchange rate depends on this.
What did the numbers show?
Actual vs. forecast. Real GDP by industry in August was 0.0% versus July, with a consensus of +0.2%. July was also 0.0%.
- -0.1% - advance estimate for September
- +0.3% - preliminary growth for the third quarter versus the previous quarter, not annualized
- October 30 at 15:30 MSK - data release time
Why did the economy stall?
What's inside. Only 9 of 20 industries grew. Goods contributed +0.1%, services -0.1%.
- Retail trade +1.2%. Autos and parts pulled it up.
- Manufacturing +0.3%. Machinery and petroleum refining helped.
- Wholesale trade -1.4%. The main drag of the month.
- Oil and gas extraction -1.2%. Third consecutive decline.
- Public sector -0.2%. Census work is winding down.
- Utilities -0.4%. The reason is repairs at nuclear power plants.
A separate collapse - autos. Output of motor vehicles and parts fell by 5.8% due to a prolonged summer plant shutdown.
What does this mean for a trader?
Reaction. USD/CAD moved down along with the dollar. But at 61.8% of the retracement from the rally that began at the August low, the pair bounced moderately.
61.8% is a level where corrections often stall.
Key point: a slowing economy usually weighs on Canadian yields and on the Canadian dollar. That is, it shifts USD/CAD upward.
What's next?
The next checkpoint is November 30. September GDP and the official quarterly report on income and spending will be released.
- The advance estimate is preliminary and may be revised
- The date is worth marking in the economic calendar
- For news trading, you can pick a challenge in advance
Were you holding the pair when the number came out?
If so, you know: everything is decided in the first minutes after the release. The trouble is that prop firms interpret such entries differently. Somewhere the window around the data is fully open, somewhere a trade a minute before the release closes the account. And each program has its own daily drawdown arithmetic: a spike in USD/CAD can eat the limit before the idea plays out. It's easier to check the terms now than on November 30 at the next report.