C$ forges ahead vs US dollar after Canada's GDP surges in June

The Canadian dollar climbed to a fresh seven-month high against its US counterpart on Friday, on pace for a fourth straight day of gains as the US dollar remained broadly weak and after data showed a record surge in Canada's real gross domestic product in June.

The Canadian dollar was at 1.3079 to the greenback, or 76.46 US cents, stronger than Thursday's close of 1.3123, or 76.20 US cents. The loonie is on track to finish the week up 0.7%, its fourth-straight weekly gain.

Canada's real GDP surged by a record 6.5% in June, as the economy continued to claw back from steep declines in March and April, though economic activity still remained below pre-pandemic levels, Statistics Canada said on Friday.

Second quarter annualized growth meanwhile sank by a record 38.7%, Statistics Canada said in a preliminary estimate.

The June numbers were above analyst expectations of a rise of 5.6%, while the second quarter plunge was slightly less sharp than an expected decline of 39.6%.

"The second-quarter GDP data confirm that the lockdown caused an unprecedented record contraction of 38.7% annualized, but the larger-than-expected rise in GDP in June at least provides a strong handover to the third quarter and means that there will now be a record expansion," Stephen Brown, senior Canada economist at Capital Economics, said in a note.

Canadian government bond prices were higher across the maturity curve. The two-year yield was at 0.294%, down from 0.297% late on Thursday, while the benchmark Canadian 10-year yield fell to 0.636% from 0.668%.