Canada: Annualized real GDP declines to 0% in Q4 vs. 1.5% expected

• Canadian economy performed much worse than expected in Q4.
• USD/CAD rises toward 1.3600 following the disappointing GDP data.

The Canadian economy stagnated in the fourth-quarter with the annualized real Gross Domestic product (GDP) growth arriving at 0%. This reading followed the 2.3% expansion recorded in the third quarter and missed the market expectation for a growth of 1.5% by a wide margin.

On a monthly basis, real GDP in Canada contracted by 0.1%.

Statistics Canada explained slower inventory accumulations and declines in business investment in machinery and equipment were behind the poor economic performance in Q4.

Market reaction

USD/CAD edged higher with the initial reaction and was last seen posting small daily gains at 1.3585.