Canada’s economy expanded strongly in the second quarter, with Gross Domestic Product (GDP) rising 0.8% quarter-on-quarter, according to Statistics Canada data released Friday. The result marks a significant acceleration from the 0.1% growth recorded in the first quarter, which was revised upward from the previously reported 0%.
On an annualized basis, Canadian GDP increased 3.3% in Q2, compared with an upwardly revised 0.3% gain in the previous quarter. The figure was slightly below the 3.4% market consensus but still represented a substantial improvement in economic momentum.
Monthly data also remained encouraging. GDP grew 0.3% in June, matching May’s pace and exceeding expectations for a slowdown to 0.2%.
The second-quarter expansion was supported by stronger exports, household consumption and business investment. Exports jumped 3.6%, recording their strongest quarterly increase since Q1 2023. Household spending also remained resilient, increasing 0.8% during the quarter.
Business investment strengthened as companies increased spending on machinery, equipment and engineering structures. Meanwhile, real GDP per capita advanced 1%, supported in part by a decline in Canada’s population for the third consecutive quarter.
The stronger economic performance could provide some support for the Canadian Dollar by reducing concerns about an extended slowdown. However, the impact on monetary-policy expectations may depend on whether the strength is sustained and how inflation develops.
USD/CAD remains relatively stable around 1.3855 on Friday despite the stronger Canadian growth figures. The limited reaction suggests that traders are reluctant to establish significant positions ahead of Federal Reserve Chair Kevin Warsh’s speech at the Jackson Hole Symposium.
A hawkish Fed message could support the US Dollar and limit the Canadian Dollar’s gains, while a softer tone could allow the strong Canadian GDP figures to have a greater influence on USD/CAD.
Trade idea:
USD/CAD remains range-bound near 1.3855; selling rallies toward 1.3900 could target 1.3780 if Canadian growth supports CAD strength.