C$ ekes out small gain after US GDP data

TORONTO: The Canadian dollar was marginally stronger against the greenback on Thursday, recouping earlier losses, after data showed the US economy grew at a more robust pace than expected in the third quarter.

US gross domestic product expanded at a 3.5 percent annual rate, the fourth quarter out of five that it grew at, or above, that level, and outpacing the 3 percent growth that economists had forecast.

But details in the report hinted at some loss of momentum, with the pace of business-investment, housing and consumer-spending growth slowing from the previous quarter.

The loonie's rise on Thursday did not take it much beyond Wednesday's finish.

"Maybe markets were looking through the headline as they should," said Benjamin Reitzes, senior economist and foreign exchange strategist at BMO Capital Markets. "The details of the report were not quite as firm as the headline. Domestic demand was not all that great in the US"

At 9:23 a.m. (1323 GMT), the Canadian dollar was at C$1.1180 to the US dollar, or 89.45 US cents, stronger than Wednesday's finish of C$1.1191, or 89.36 US cents.

Reitzes said the currency was likely to be confined between C$1.11 and C$1.14 for the remainder of the year unless there is a major catalyst or another large fall in oil prices. He added that attention will likely remain focused on the Fed in the near term, noting the more hawkish tone of a Fed statement on Wednesday.

In the statement, the US central bank said it was ending its monthly bond purchase program and dropped a characterization of US labor market slack as "significant" in a show of confidence in the economy.

After markets closed on Wednesday, Bank of Canada Governor Stephen Poloz welcomed the Fed's latest move, saying it showed the US economy is gaining traction, but he warned weaker oil prices will crimp Canadian growth.

"From a policy perspective, the Bank of Canada is going nowhere and I think everyone's perfectly aware of that," Reitzes said.

Canadian government bond prices were higher across the maturity curve, with the two-year rising less than half a Canadian cent to yield 1.041 percent and the benchmark 10-year rising 17 Canadian cents to yield 2.038 percent.