Archived IMT (2009.03.31)

Canadian dollar fights off selling largely due to rallying equities, but the 0.7% decline in January GDP is keeping any upside capped. Though the 0.7% decline was within expectations, the third consecutive monthly growth contraction underlines CAD's lag behind US underperformance. The sharper than expected decline in US home price declines goes largely unnoticed by equities, which is helping sustain AUD, EUR and GBP vs USD. We still expect USDCAD to regain 1.26, while AUDNZD is seen recovering 1.23 in the event of positive Aussie retail sales later tonight (0.30 GMT).