The Canadian economy seems to be having trouble with the “last mile” of recovery and the currency exchange markets are showing their disappointment by pressuring the Canadian dollar. USD to CAD is currently at 1.236 (CAD to USD is at 0.810). The loonie is down 0.3% from yesterday afternoon. GDP growth seems to have stalled at the end of the third quarter. In fact, according to a release from Statistics Canada, the economy did not grow at all in September. Private sector economists had expected 0.5% growth in September. The slowdown seems to have started in August where growth came in at 0.4% versus an expectation of 0.7%. While the data is preliminary, the third quarter, with an estimated GDP growth of 0.5% overall, is turning into a major disappointment. Supply chain disruptions are being blamed for major drops in retail and manufacturing. The miss on GDP in Canada follows weaker-than-expected US Q3 GDP data yesterday, though the numbers south of the border were not as bad. Unsurprisingly, foreign exchange markets punished the Canadian dollar after the release. The loonie has now given up half of its gains from earlier this week which resulted from the Bank of Canada moving up its projections for interest rates hikes. With oil prices softer again this morning, there is good reason to think that the loonie will continue to show relative weakness today.
