Canadian Dollar Falls Sharply As Economy Contracts Unexpectedly

The Canadian dollar fell sharply against its major rivals on Friday, after data showed that Canadian economy contracted unexpectedly in the first quarter.

Data from Statistics Canada showed that Canadian economy contracted a seasonally adjusted 0.6 percent on an annualised basis in the first quarter, compared to a 0.3 percent growth expected by economists. The fourth quarter economic growth was revised down to 2.2 percent.

The gross domestic product decreased 0.1 percent on quarter in the first quarter, following a growth of 0.6 percent in the fourth quarter of 2014. This was the first negative growth rate of real GDP since the second quarter of 2011.

The loonie rose against the greenback, but held steady against the euro, aussie and the yen in the Asian session.

In European deals, the loonie slipped to a 2-day low of 99.01 against the yen, off early high of 99.75. Continuation of the loonie's downtrend may lead to a support around the 98.00 level. The pair was trading at 99.65 when it closed Thursday's trading.

Pulling away from an early 2-day high of 1.2410 against the greenback, the loonie declined to 1.2526.The pair was quoted at 1.2433 at yesterday's close. The loonie may possibly find support around the 1.26 mark.

The loonie fell to a 10-day low of 1.3750 against the euro, after advancing to 1.3592 at 1:15 am ET. The next possible downside target for the loonie may be eyed around the 1.38 area. At Thursday's close, the pair traded at 1.3611.

The loonie, having advanced to more than a 3-week high of 0.9496 against the aussie at 9:00 pm ET, reversed direction with pair trading at 0.9572. The pair finished Thursday's trading at 0.9508. If the loonie extends slide, it may find support around the 0.96 region.