The Canadian economy got off to a roaring start to 2016 as GDP grew by as much in one month as it did over the whole of 2015. But while it’s certainly true that the worst is behind us, there’s also good reason not to get too carried away and expect the strong growth to continue.
Firstly, the increases in manufacturing production and shipments has gone beyond the rise in orders, chewing slightly into previously elevated levels of unfinished orders.
And secondly the extremely mild winter could have simply brought forward retail sales from later in the year, as has been the case previously in mild winters.
As the US data improves heading into Q2 and Canadian GDP potentially gives back some of January’s gain, look for the C$ to retreat from recent stronger levels.
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