Canada: Annualized real GDP contracts unexpectedly by 0.2% in Q2, missing expectations of 1.2% growth

• Canadian economy contracts 0.2% against expectations of a 1.2% expansion.
• USD/CAD stays in positive territory above 1.3500 after the data and US NFP. 

Canada's real Gross Domestic product (GDP) contracted at an annual rate of 0.2% in the second quarter quarter, Statistics Canada reported on Friday. This reading followed the 2.6% expansion (revised from 3.1%)recorded in the first quarter and came in worse than the market expectation for an expansion of 1.2%.

On a quarterly basis, real GDP stagnated compared to analysts' estimate of a 0.3% expansion. During the first quarter it expanded 0.6% (revised from 0.8%). 

On a monthly basis, real GDP contracted in June 0.2%, in line with expectations. In May the economy expanded 0.2% (revised from 0.3%). 

Market reaction

The Loonie weakened in the market after the data. Not only did the Canadian economy contract unexpectedly during the second quarter, but previous numbers were revised lower.

USD/CAD rose modestly to fresh daily highs above 1.3520. At the same time, the US official employment report was released ,and it triggered a decline of the US Dollar that contributed to limit the upside of the pair.