The Canadian Economy Contracts 1.4% In The First Quarter

Canadian GDP m/m Actual -0.3, Expected -0.3, Previous -0.1 (Revised from 42.9)

Release Explanation: This report measures the monetary value of all goods and services produced within a Country's borders in a specific time period. GDP is calculated on an annual basis, is the broadest measure of activity, and the primary gauge of each economy's overall health. It includes all Company and Personal consumption, government outlays, investments, and exports fewer imports, that occur within a defined territory.

"A strong annual GDP outlook will lead to strong investment in an economy especially from overseas. A weak annual GDP outlook will usually lead to a slowdown in the economic business cycle. The yearly forecast is as important as the actual release number. As a reflection of the value of what an economy is producing, GDP will invariably have a ripple effect across all other economic releases, over a period of time," TheLFB-Forex.com Trade Team said.

TheLFB-Forex.com Trade Desk Thoughts: The Canadian economy contracted 0.3% in March, totaling a 1.4% decline over the first three months of the year, the biggest quarterly decrease since 1991. In February and March the pace of economic decline slowed, following the substantial decline observed over the previous three months.

The quarterly GDP read was affected negatively by marketable declines in the trade balance and in consumer demand, but received support from the government's spending.

Consumer spending fell 0.4% in the first quarter from the preceding one. Moreover, durable goods declined 1.8%, being responsible for a substantial decline of the Canadian economy in the first quarter. Exports fell 8.7% in the first quarter, while imports tumbled 11%, falling for the third consecutive quarter. The pace of decline seen in imports denotes weak consumption, TheLFB-Forex.com Trade Team notes.

Business inventories contracted 11% in the first three months of the year, the steepest contraction pace since 1982. Corporate profits kept the strong contraction pace into the first quarter, falling 24%.

Forex Technical Reaction: The release had no effect in the currency market. The cad is currently testing the 1.0820 area, where an eight month support can be found.

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