Canadian Dollar Gets GDP Growth Boost

The Canadian dollar gained for a fourth day after economic growth rebounded to the fastest in almost three years in the second quarter, led by exports and household spending on big-ticket items.

The currency extended a weekly advance against its U.S. peer as Canada’s growth has picked up along with the American economy, which grew at a 4.2 percent annualized second-quarter pace, the Commerce Department said yesterday from Washington. Bank of Canada Governor Stephen Poloz has said it will take another two years to use up slack that built up in the world’s 11th largest economy.

“Even though the headline data came in stronger than the market was expecting, it wasn’t that much stronger that it’s going to cause the Canadian dollar to appreciate too much,” David Bradley, director of foreign exchange trading at Scotia Capital Inc., a unit of Bank of Nova Scotia, said by phone from Toronto. “We had a little bit of a move down to the lows we’ve seen recently” for the U.S. dollar, he said.

The loonie, nicknamed for the image of the aquatic bird on the C$1 coin, rose 0.2 percent to C$1.0844 per U.S. dollar at 9:04 a.m. in Toronto. It touched C$1.0831 after climbing to C$1.0829 on Aug. 27, the strongest since July 29.

The loonie’s weekly gain of 0.9 percent gave it a monthly advance to 0.6 percent. It’s still down 1.6 percent this quarter and 2 percent year-to-date.

The yield on Canada’s benchmark 10-year bond rose to 2.01 percent after touching 1.979 percent yesterday, the lowest since May 2013. It’s down from a 2014 high of 2.80 percent on Jan. 2.

via Bloomberg

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.