Skip to main content

The Globe and Mail

Loonie ends half a cent higher on strong gain in Canadian GDP

Canadian dollar

Jonathan Haywa/The Canadian Pre

The Canadian dollar closed sharply higher Friday amid data showing that the economy slowed more than expected in December but that overall growth last year still turned out to be the best since 2011.

The loonie gained half a cent to end at 90.3 cents (U.S.).

Statistics Canada reported that fourth-quarter economic growth came in at an annualized pace of 2.9 per cent. That was better than the 2.5 per cent rise that had been expected. But gross domestic product contracted by 0.5 per cent in December, more than the expected 0.3 per cent drop.

Story continues below advertisement

Other data out of Ottawa showed that the federal budget was in the black in December as Ottawa recorded a $1.15-billion (Canadian) surplus. That compares with a $700-million deficit recorded in December, 2012.

The government forecasts a $16.6-billion deficit for the 2013-14 fiscal year ending March 31, and the December figure is close to that track. For the nine months to December, the deficit was $12.7-billion.

In the U.S., the first revision to fourth-quarter GDP showed that the economy grew at an annualized rate of 2.4 per cent, matching expectations but down sharply from the original 3.2 per cent reading.

By contrast, Statistics Canada raised its initial estimates for the first two quarters of 2013 and said the overall growth rate for the year was 2.0 per cent.

Meanwhile, the Chicago Purchasing Managers Index, a gauge of manufacturing activity in the American Midwest, showed stronger-than-expected expansion this month, coming in at 59.8, up from 59.6 in January.

And the University of Michigan's influential consumer confidence index came in at 81.6, up from 81.2 in January.

Investors are keeping an eye on the crisis in Ukraine following accusations by the country's new Interior Minister, Arsen Avakov, that the Russian military is blocking a Ukrainian military airport in the Black Sea port of Sevastopol in Crimea.

Story continues below advertisement

IG market analyst Stan Sahmu said that while traders for now are focused on economic indicators, "the Ukraine situation seems to be escalating in the background and could haunt markets in coming weeks."

On the commodity markets, the April crude contract on the New York Mercantile Exchange gained 19 cents to $102.59 (U.S.) a barrel.

May copper was down a cent at $3.19 a pound while April gold bullion dropped $10.20 to $1,321.60 an ounce.

Report an error
Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨