Canada's Strong Resource Sector Drives Economic Growth

Canada's economy has beaten expectations in May, growing by 0.3% and outperforming forecasts of a 0.2% gain, according to Statistics Canada.

The growth was largely driven by the resource sector, with mining and oil and gas extraction increasing by 1.0%, thanks to higher output from the oil sands.

This has raised concerns about interest rate cuts, as policymakers have less reason to add support if growth is stronger than expected.

As a result, traders are dialing back expectations for near-term rate cuts, which could push up yields on short-term Government of Canada bonds and make the Canadian dollar more sensitive to future GDP and inflation data.