CAD Slips After Strong US GDP Revision

The Canadian dollar slipped back below 90 cent US Friday morning as the American currency strengthened amid revised U.S. economic figures that were better than-expected.

The loonie declined 0.11 of a cent to 89.92 cents US. It had also traded briefly below 90 cents earlier this week but closed above that mark each day.

The third and final official estimate of U.S. second-quarter gross domestic product says the world’s largest economy expanded at an annual rate of 4.6 per cent in the spring, the fastest pace in more than two years. It suggests the strong growth will help the economy build on momentum for expansion for the rest of the year.

The growth in the April to June quarter reported by the U.S. Commerce Department was in sharp contrast to a decline of 2.1 per cent for the first three months of the year, which included unusually harsh winter weather.

The U.S. greenback is in the midst of an 11-week rally, as signs continue to emerge that the U.S. economy is growing but not enough to prompt the U.S. Federal Reserve to hike interest rates any time soon. The assurance has injected confidence back into the U.S. dollar, which has in turn, resulted in a lower Canadian dollar.

The outlook for the U.S. continues to remain upbeat, compared with other economies, but figures released Thursday showed that some weakness remains.

The U.S. Commerce Department says business orders for long-lasting manufactured goods fell by a record 18.2 per cent in August, dragged lower by a plunge in demand for commercial aircraft.

via Kitco

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza