TORONTO: The Canadian dollar edged lower against its US counterpart on Friday, but the currency was still on track for a monthly gain as domestic data showed stronger-than-expected economic growth.
The loonie was trading 0.1 percent lower at 1.4025 per US dollar, or 71.30 US cents, after trading in a range of 1.4003 to 1.4057. For July, the currency was headed for a gain of 1.2 percent as the price of oil, one of Canada’s major exports, jumped.
Canada’s gross domestic product grew by 0.3 percent in May, eclipsing the 0.2 percent gain analysts had expected, while a preliminary estimate pointed to annualized second-quarter growth of 3.4 percent, which would be its best quarterly performance for more than three years.
“For the Bank of Canada, this will provide them with a bit more evidence that the economy is adapting to the trade uncertainty, and will trim their estimate of slack,” Douglas Porter, chief economist at BMO Capital Markets, said in a note. “But it likely won’t change the bigger picture concerns of fresh tariff threats and lofty energy prices.”
Investors expect the Bank of Canada to leave its benchmark interest rate on hold over the coming months, while chances of a hike by year-end edged only slightly higher to 68 percent from 60 percent, swap market data showed.
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