Canadian Dollar Weakens on Soft GDP Data

2026-05-29 21:23 By Isabela Couto 1 min. read

The Canadian dollar weakened past 1.378 per USD in late May as weak economic data reinforced expectations of a dovish Bank of Canada.

Canada's economy unexpectedly contracted in the first quarter of 2026 from a year earlier, marking a second consecutive quarter of annual decline and highlighting slowing domestic momentum.

The data strengthened expectations that the BoC will keep interest rates unchanged, with markets broadly anticipating a hold at the June 10 meeting.

Meanwhile, the Bank of Canada’s preferred core inflation measures slowed more than expected to their lowest levels in five years, signaling easing underlying price pressures outside the energy sector.

The figures reinforced the central bank’s view that energy-driven inflation may prove temporary and further reduced the likelihood of additional rate hikes, weighing on the loonie.



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