Canada Dollar Trades Weaker Than Parity Versus U.S. for 7th Day
The Canadian dollar traded below parity against its U.S. counterpart for the seventh day even as a report showed the world’s 11-largest economy grew faster than forecast in November.
The currency, nicknamed the loonie for the image of the aquatic bird on the C$1 coin, fluctuated after Canada’s gross domestic product expanded 0.3 percent, the fastest pace in seven months, Statistics Canada said today in Ottawa. The median forecast in a Bloomberg economist survey was for a 0.2 percent expansion. The loonie dropped earlier after a report showed German retail sales fell more than economists predicted last month.
“Canadian numbers had a small positive surprise,” said Shaun Osborne, chief currency strategist at Toronto-Dominion Bank (TD), by phone from Toronto. “I think that keeps the GDP tracking more or less in line with something where the bank is and where we are. We may have seen all the reaction we’re likely to see on the Canadian dollar for the moment.”
The loonie was little changed at C$1.0009 per U.S. dollar at 9:52 a.m. in Toronto. On an intraday basis, it hasn’t traded stronger than parity since Jan. 22. One Canadian dollar buys 99.91 U.S. cents. Canada’s currency has weakened 1 percent this month, the most since October.
Crude oil, the country’s largest export, fell 0.7 percent to $97.26 and the Standard & Poor’s 500 Index of U.S. stocks fell 0.1 percent.
The country’s benchmark 10-year bonds were little changed with yields at 1.99 percent. The 2.75 percent security maturing in June 2022 traded at C$106.41.
Canada’s economy grew to an annualized C$1.56 trillion ($1.56 trillion) on gains in manufacturing, mining and energy, Statistics Canada said. The report suggested growth rebounded in the fourth quarter from the 0.6 percent annual pace seen from July through September. The expansion has been supported by the job market, with the unemployment rate falling to a four-year low in December.
“In the last couple of months, we’ve seen temporary GDP downside from disruptions in oil production in the east and pipeline challenges in western Canada,” Emanuella Enenajor, an economist at Canadian Imperial Bank of Commerce, said in a telephone interview from Toronto, prior to the data release. “We expect that there is some bounce back from those numbers.”
Investors increased their expectations the Bank of Canada will raise interest rates before the end of the year after the data, pricing in 10.8 basis points of tightening by the Dec. 4 meeting, compared with 9.2 basis points yesterday, Bloomberg calculations based on overnight index swaps show.
In a separate report, Statistics Canada said today its index of raw-materials prices paid by manufacturers dropped 2 percent in December from November. Economists in a Bloomberg survey had a median prediction of a 0.3 percent increase.
Retail sales in Germany, Europe’s largest economy, adjusted for inflation and seasonal swings, dropped 1.7 percent from November, when they rose a revised 0.6 percent, Germany’s Federal Statistics Office in Wiesbaden said today.
The loonie has declined 3.4 percent during the past six months among the 10 developed-nation currencies monitored by the Bloomberg Correlation-Weighted Indexes. The greenback fell 3.6 percent.
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