Loonie declines amid rebound in U.S. GDP; traders look to Canadian growth data

Photo: The Canadian Press. All rights reserved.

A Canadian dollar or loonie is pictured in North Vancouver on March 5, 2014. THE CANADIAN PRESS/Jonathan Hayward

TORONTO - The Canadian dollar closed lower Wednesday as the American greenback gained strength against major currencies after data showed that the U.S. economy rebounded strongly in the second quarter.

The loonie was down 0.36 of a cent to 91.73 cents US as gross domestic product in the U.S. grew a much better than expected four per cent after contracting in the January-March period because of severe winter weather. That contraction was revised lower to 2.1 per cent from 2.9 per cent.

The data was released a day before Statistics Canada reports gross domestic product data for May. Economists looked for a 0.3 per cent advance in the month but some say that Canadian GDP could come in higher.

Traders also took in some positive employment news two days before the release of the American government's employment report for July. Payroll firm ADP reported that 218,000 jobs were created in the private sector during the month. Analysts looked for the U.S. government report to show that about 230,000 jobs were created during July.

Canadian jobs data for July comes out on August 8.

Meanwhile, the U.S. Federal Reserve ended its two-day policy meeting with word that it is continuing to pare its monthly bond purchases. They have been intended to keep long-term borrowing rates low and are set to end in October.

The Fed reiterated that it will keep short-term rates low "for a considerable time" after those bond purchases end. Most economists think a rate increase is about a year away.

On the commodity markets, oil prices lost early momentum from the economic growth data and September crude slipped 70 cents to US$100.27.

September copper was two cents higher at US$3.24 a pound while December bullion was off $3.60 to US$1,296.90 an ounce.