TORONTO: The Canadian dollar firmed against the greenback on Friday, making a fourth day of gains in a row after data showed the domestic economy grew at a faster pace than expected in the second quarter.
The loonie is up about 1 percent for the week, partly fueled by a sharp gain on Wednesday and putting it on track for its best week since late March.
A number of factors have driven the loonie higher, including fund flow speculation stemming from Burger King's plans to buy Tim Hortons and investor repositioning at the end of the month.
The market had also been readying for the possibility that Friday's economic data could come in stronger than expected and the gross domestic product report delivered, coming in with a 3.1 percent annualized rate of growth.
That was better than forecasts for 2.7 percent and sent the loonie to a session high at C$1.0829.
"As a stand-alone, this is a relatively strong report and it should support the recent gains we've seen in the Canadian dollar," said Doug Porter, chief economist at BMO Capital Markets in Toronto.
The Canadian dollar was at C$1.0839 to the greenback, or 92.26 US cents, stronger than Thursday's close of C$1.0847, or 92.19 US cents.
Trading volumes could thin through the day heading into a long weekend with Canadian and US markets closed on Monday for Labor Day.
Focus next week will be on the Bank of Canada's monetary policy statement to be delivered on Wednesday. The central bank is expected to leave rates at 1 percent until the third quarter of next year and is seen sticking to its cautious tone next week.
Canadian government bond yields rose, with the yield on the benchmark 10-year bouncing off Thursday's nearly 1-1/2-year low.
The two-year was down 1-1/2 Canadian cents in price to yield 1.109 percent, and the 10-year was down 10 Canadian cents to yield 2.010 percent.
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