The Q1 GDP report from Canada was just released, showing a cool off in March. Although the real monthly figure was better than anticipations. But, the annualized number came way below expectations of 5.4%, at 3.1%. Canada is not too affected by Russian Oil since it is a major exporter of Oil itself. But, the increase in prices will start showing the effects on the economy during Q2.

Canada March and Q1 GDP Report

• Q1 GDP annualized +3.1% vs +5.4% expected
• Prior quarter was +6.7% (revised to +6.6%)
• March GDP +0.7% m/m
• Feb GDP +1.1% MoM (revised to +0.9%)
• April flash GDP estimate MoM +0.2%
• Q1 real GDP QoQ +0.8% vs +1.6%
• Q1 GDP price index QoQ +2.9% vs +1.9% prior

The Bank of Canada estimate was 3.0% and their interest rate decision is tomorrow. This is a big miss, though still slightly above the BOC estimate. After yesterday’s strong current account data, many were leaning towards a 6% reading.

DGP Report Details

• Export volumes declined 2.4%
• Investment in residential construction rose for a second consecutive quarter, up 4.3%
• Business investment in non-residential structures (+2.9%) and in machinery and equipment (+0.9%)
• Compensation of employees rose 3.8% on a nominal basis
• 8.1% household savings rate in the first quarter vs 6.9% in Q4 (prior to 2020, the avg was 3.5%)

Tomorrow’s BOC decision is a slam-dunk 50 bps hike but the July meeting is at 80% and could drift a bit lower. I still strongly suspect the BOC will signal aggressive action but this and the sudden stop in housing will give them a bit of pause.

AUD/CAD Daily Chart – Finding Support at the 100 SMA

Starting to reverse after yesterday’s doji candlestick