Forex: USD/CAD – Loonie Advances Against USD

on May 30, 2013
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Following disappointing US data, an already weakened US dollar has declined against its Canadian counterpart. US GDP increased by 2.4 percent in Q1, against 0.4 percent in Q4 of 2012, undershooting expectations for 2.5 percent growth.

Yesterday, the Canadian dollar rose against its US peer for the first time in four days, retracing from 1.04 to the 1.03 levels, as Bank of Canada Governor Mark Carney left interest rates unchanged at one percent.
The pair had been trading higher, at close to the 1.0390 level, before the release of the US GDP data. It then declined to 1.0341, despite slightly negative Canadian data – the Industrial Product Price index fell by 0.8 percent in April and the Material Price Index decreased to 2.2 percent versus 1.7 percent in March.

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But at 13:30 BST today, Statistics Canada released the country’s current account deficit for Q1, showing an improvement at -CAD14.9 billion, against -CAD14.63 billion in Q4 2012.
So far today, the loonie has strengthened from its lowest level in almost a year, ahead of GDP data due tomorrow and expected to show annualised growth of 2.3 percent for Q1, as against 0.6 percent growth for the previous quarter.

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