Canada’s economy continued its recovery driven by a surge in home construction and a rebound in consumption. GDP expanded by annualized 5.6% in the three-month period, which was actually below the 6.7% expectation. Total economic activity is now about 1% below the level observed in February 2020, before the COVID-19 pandemic. Preliminary April data suggests a contraction of 0.8% as a result of the most recent wave of shutdowns across the country. USD to CAD absorbed the GDP data by modestly contributing to the already strengthening Canadian dollar. The Loonie had already been trading up (0.4%) this morning as a result of the overall positive mood on this first day of June, with equities reaching for new record levels and oil prices further ploughing into multi-year highs. USD has even momentarily traded below 1.20 CAD and it would not be at all surprising if we breached that level today again. For some context, the average for USD to CAD since 2000 is 1.22 so we are already below what some would long term consider equilibrium levels.
