Canada’s Dollar Jumps on Strong Economic Growth Report

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Canada’s Dollar Jumps on Strong Economic Growth ReportThe Canadian dollar touched its highest level in a month against its U.S. counterpart after the economy grew the most in nearly three years in the second quarter, boosted by exports and increased spending on high-value items.

The loonie jumped 0.6 percent this week to trade at C$1.0878 per U.S. dollar as of 5 p.m. Toronto time, after earlier jumping to C$1.0811, the highest level since July 29.

Statistics Canada reported on Friday that the country’s gross domestic product jumped 3.1 percent in the second quarter. Economists surveyed by Bloomberg News had expected a growth rate of 2.7 percent. Exports rose 17.8 percent due to increased expenditure on farm and forest products and automobiles, while household spending grew 3.8 percent.

“Even though the headline data came in stronger than the market was expecting, it wasn’t that much stronger that it’s going to cause the Canadian dollar to appreciate too much,” said David Bradley, a Toronto-based director of foreign exchange trading at Scotia Capital Inc. “We had a little bit of a move down to the lows we’ve seen recently for the U.S. dollar”.

The yield on the Canada’s target 10-year bond rose to 2 percent after earlier dropping to 1.979 percent on Thursday, the weakest level since May 2013. However, this is still a far cry from this year’s high of 2.80 percent, which was attained on January 2.

Meanwhile, the ruble plunged on speculation Russia may be slapped with further sanctions over its interference in Ukraine conflict. The currency fell 0.7 percent to trade at 37.0130 per dollar at 6:10 p.m. Moscow time, after earlier touching 37.0260, a new low.

U.S. and the European Union threatened to impose further penalties on Russia after violence in eastern Ukraine escalated. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com