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Q1 GDP Softer Than Market, In Line With BoC Forecast

CANADA
  • Surprisingly soft real GDP print of 3.1% annualised in Q1 (cons 5.2%) after marginally downward revised +6.6% in Q4. The press release indicates that the drags on a quarterly basis were backdated, being focused on “several client-facing service industries” impacted by Omicron-linked restrictions.
  • Whilst softer than expected, it leaves it almost exactly where the BoC expected for Q1 (3.0%), before they see it re-accelerating to 6.0% in Q2.
  • Looking at the latest monthly data, GDP was broadly as expected with a small beat for March (+0.7% M/M vs cons +0.5%) offset by a downward revised +0.9% M/M in Feb (from +1.1% M/M). Momentum is seen slowing into April with the flash at +0.2% M/M, in line with what CIBC forecast.
  • USDCAD popped 20 pips higher on the release but has retraced half of this, sitting +0.15% on the day at 1.2678. 2Y GoC yields dip slightly but are still up +6.5bps on the day, whilst the 10Y has nudged 0.5bps higher for +10bps on the day.

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