Loonie lower as U.S. GDP advances, traders look to Canadian growth figures - InfoNews

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

Canadian dollars coins are shown with U.S dollars bills April 6, 2010 in Montreal. THE CANADIAN PRESS/Ryan Remiorz
January 30, 2014 - 5:50 AM

TORONTO - The Canadian dollar fell Thursday amid data showing U.S. growth coming in slightly lower for the fourth quarter.

The loonie was down 0.1 of a cent to 89.36 cents U.S. as gross domestic product rose by an annualized rate of 3.2 per cent, which was broadly in line with expectations.

The reading was slightly lower than the 4.1 per cent rate registered in the July-September period. But for all of 2014, analysts are more optimistic with many forecasting GDP growth of three per cent or better.

Traders were also looking to the release Friday of the latest reading on the Canadian economy. Economists expect Statistics Canada to report that gross domestic product 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 1/5 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 in January amid disappointing Chinese manufacturing data, a worsening Canadian trade deficit and employment picture and U.S. dollar that has picked up in value.

"The downward trend in the Canadian dollar is too strong to fight or attempt to pick a bottom," Camilla Sutton, chief FX strategist at Scotiabank Global Banking and Markets.

"We expect ongoing Canadian dollar weakness before it stabilizes in the second half of the year."

On the commodity markets, the March crude oil contract on the New York Mercantile Exchange rose 42 cents to US$97.78 a barrel.

Metal prices were lower with the March copper contract down a cent to US$3.23 a pound while the February gold bullion contract lost $16.10 to US$1,256.10 an ounce.

News from © The Canadian Press, 2014
The Canadian Press

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