Slight dip in GDP with encouraging signs
As expected, the Canadian economy shrank slightly in February after an outsized gain the previous month. Despite the slight downturn in GDP announced on Friday, forecasts for the Canadian economy have generally improved, thanks to a weaker dollar over the past year. Tourism-related sectors such as restaurants and lodging have been particularly helped by the weak loonie.
This morning, we’ll be keeping an eye on the ISM Manufacturing Index, where a reading above 50 represents an expansion. Later in the week, we’ll have a look at the job situation in both Canada and the United States. A slight pullback in job creation is expected on both sides of the 49th parallel.
For those of you who have not had the opportunity to read our Forex newsletter for May, it includes revised forecasts reflecting the persistent weakness of the U.S. dollar, which could reach 1.23 in the fourth quarter. Our team of economists sees the Federal Reserve moving forward with a single key rate hike toward the end of the year, with the USD rallying to win back its lost ground, reaching 1.29 in the fourth quarter.
