Thursday, August 21st21.9°C
22951
22285

Loonie rises as U.S. GDP advances, traders look to Canadian growth figures

TORONTO - The Canadian dollar closed higher Thursday as the latest U.S. data raised hopes for a stronger economic performance in 2014.

The loonie ended up 0.1 of a cent at 89.56 cents U.S. after a report that U.S. gross domestic product rose by an annualized rate of 3.2 per cent in the fourth quarter, broadly in line with expectations.

The growth was slightly below the 4.1 per cent rate registered in the July-September period. For all of 2014, many analysts are forecasting U.S. GDP growth of three per cent or better.

Economists expect Statistics Canada to report Friday that gross domestic product in Canada increased by 0.2 per cent in November, slightly lower than the 0.3 per cent gain in October.

The loonie's loss followed a drop of almost one-fifth of a cent Wednesday in the wake of the latest move by the U.S. Federal Reserve to cut back on its stimulus measures.

The Fed is cutting its bond purchases by another US$10 billion to $65 billion a month. It was the central bank's second such move to cut back the program to help keep long-term interest rates low.

The cuts have also drawn money out of many emerging markets and in turn put pressure on currencies in countries such as India, South Africa, Russia and particularly Turkey.

The Canadian dollar has tumbled more than four U.S. cents so far this year.

The slide has come amid disappointing Chinese manufacturing data, a worsening Canadian trade deficit and employment picture and U.S. dollar that has picked up in value.

It's hard to say how low the currency could go this year, but BMO Capital Markets said it could slide as low as 87 cents US by mid-year — or maybe earlier.

BMO senior economist Benjamin Reitzes believes the biggest reason for the loonie's slide is likely the message the Bank of Canada is sending on interest rates.

"Since governor Poloz took the helm at the bank, each statement has become more dovish than the last," he observed.

"He can't go much further down that road without easing policy, and markets are pricing in slight odds of a rate cut this year."

On the commodity markets, the March crude oil contract on the New York Mercantile Exchange rose 87 cents to US$98.23 a barrel.

Metal prices were lower with the March copper contract down one cent to US$3.23 a pound while the April gold bullion contract lost $19.70 to US$1,242.50 an ounce.

Note to readers: This is a corrected story. An earlier version incorrectly identified Benjamin Reitzes.

The Canadian Press


Read more Business News

20759


Recent Trending




Today's Market
S&P TSX15564.33+2.38
S&P CDNX995.42-1.28
DJIA17040.2061.07
Nasdaq4532.104+5.623
S&P 5001992.35+5.84
CDN Dollar0.9137+0.0022
Gold1273.80-19.60
Oil96.30+1.82
Lumber356.10+1.10
Natural Gas3.879+0.056

 
Okanagan Companies
Pacific Safety0.18-0.005
Knighthawk0.01-0.005
QHR Technologies Inc1.20-0.01
Cantex0.065-0.005
Anavex Life Sciences0.260.00
Metalex Ventures0.075-0.01
Russel Metals37.55+0.10
Copper Mountain Mining2.90-0.02
Colorado Resources0.175-0.01
ReliaBrand Inc0.095+0.01
Sunrise Resources Ltd0.025-0.005
Mission Ready Services0.215-0.015

 



21097

FEATURED Property
1999670 #132, 2550 Hollywood Road N
2 bedrooms 2 baths
$319,900
more details
image2image2image2
Click here to feature your property
Please wait... loading


Joint accounts: what you need to know!

Establishing a joint account may seem like a great strategy at first glance. However, there are many factors that must be considered before taking this action. This article will explore the use of &ls...


Cost of an Injury Lawyer

Let’s face it; nobody wants to pay for legal services if they do not have to, but if you have been injured in an accident you may have thought about hiring a lawyer to help you navigate your cla...


Going home to a bully!

Finally, after three months in New Brunswick, I am back home in the sunny Okanagan. It is a delight to be home and the lake, vistas, people and climate never disappoint. Like many people however, I...

_








Member of BC Press Council


22814