Canadian Dollar Trades Near Six Month Low as U.S. Economy Contracts

Canada’s dollar traded close to a six-month low versus its U.S. counterpart as data showed the economy of the nation’s largest trading partner unexpectedly shrank in the fourth quarter.

The Canadian pared losses after the U.S. Federal Reserve said it will keep buying bonds as the economy paused because of temporary forces including bad weather. Canada’s gross domestic product figures tomorrow are forecast to show growth increased to 0.2 percent in November from 0.1 percent the month before, according to the median estimate of a Bloomberg survey of 24 economists.

“When the data came out, the headline looked dismal,” said Emanuella Enenajor, an economist at CIBC World Markets by phone from Toronto. “But some key sectors anticipated to lead the U.S. recovery were quite strong, so that’s where you saw the Canadian dollar gain ground in the post knee-jerk reaction.”

Bloomberg

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Stuart McPhee

Stuart McPhee

Senior Currency Technical Analyst at Market Pulse
Stuart McPhee has nearly 20 years’ experience as a private trader and he specializes in technical market analysis of major currency pairs. He is the author of several bestselling trading books, most recently the fourth edition of his popular book “Trading in a Nutshell” (John Wiley), and he contributes articles to daily newsletters and blogs. He produces articles and videos on the how-tos of technical trading. Living in Melbourne, Australia, Stuart speaks at conferences and events worldwide.
Stuart McPhee