The Bank of Canada announced on Wednesday that it revised its 2021 GDP growth higher to 6.5% from 4% in January's Monetary Policy Report (MPR).
Key takeaways as summarized by Reuters
"Bank of Canada projects economic slack will be absorbed some time in H2 2022 vs. 2023 in January MPR."
"Timing of this projection is more uncertain than usual, given the uncertainty around potential output and highly uneven impacts of the pandemic."
"BoC projects 2022 GDP growth of +3.7% (vs +4.8%) and 2023 +3.2% (vs +2.5%)."
"BoC estimates pandemic will be less detrimental to potential output than previously assessed; sees potential output growth averaging about 1.6% per year over 2021-23, up 0.5 percentage points from October."
"Economic activity will be supported by strong foreign demand, relatively high commodity prices, recovery in confidence, and fiscal and monetary policy."
"Current resurgence of COVID-19 presents a new setback; the economic impact of the third wave expected to be material but temporary."
"In near-term, inflation expected to rise temporarily to the top of 1%-3% target range on base-year effects and gas pricing."
"Inflation will then decline towards 2% over H2 2021 and drop further in h1 2022, expected to be at around 2% in H2 2022 as slack is absorbed."
"It may take some time for overall employment to recover; given population growth, around 475k people would need to be hired to reach pre-pandemic employment levels."
"Goods exports set to strengthen on global demand and high commodity prices; this will substantially exceed adverse impacts of recent C$ rise."
Market reaction
The USD/CAD pair extends slide during the American trading hours and was last seen losing 0.95% on a daily basis at 1.2490.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
GBP/USD remains on the defensive below 1.2450 ahead of UK Retail Sales data
GBP/USD remains on the defensive near 1.2430 during the early Asian session on Friday. The downtick of the major pair is backed by the stronger US Dollar as the strong US economic data and hawkish remarks from the Fed officials have triggered the speculation that the US central bank will delay interest rate cuts to September.
EUR/USD extends its downside below 1.0650 on hawkish Fed remarks
The EUR/USD extends its downside around 1.0640 after retreating from weekly peaks of 1.0690 on Friday. The hawkish comments from Federal Reserve officials provide some support to the US Dollar.
Gold: Middle East war fears spark fresh XAU/USD rally, will it sustain?
Gold price is trading close to $2,400 early Friday, reversing from a fresh five-day high reached at $2,418 earlier in the Asian session. Despite the pullback, Gold price remains on track to book the fifth weekly gain in a row.
Dogwifhat price pumps 5% ahead of possible Coinbase effect
Dogwifhat price recorded an uptick on Thursday, going as far as to outperform its peers in the meme coins space. Second only to Bonk Inu, WIF token’s show of strength was not just influenced by Bitcoin price reclaiming above $63,000.
Israel vs. Iran: Fear of escalation grips risk markets
Recent reports of an Israeli aerial bombardment targeting a key nuclear facility in central Isfahan have sparked a significant shift out of risk assets and into safe-haven investments.