BUSINESS

Canadian dollar fades amid strong U.S. GDP data, little else on radar

09/26/2014 09:29 EDT | Updated 11/26/2014 05:59 EST
TORONTO - The Canadian dollar slipped back below 90 cents US Friday as the American currency strengthened amid revised U.S. economic figures that were better than expected.

The loonie declined 0.38 of a cent to 89.65 cents US. It had traded at times below 90 cents earlier this week, but always closed above that mark.

One analyst said markets have been expecting the loonie to come down to the 90-cent US range for some time now.

"It's been propped up longer than most expected," said Kevin Headland, director of the portfolio advisory group for Manulife Asset Management. "If you look at the U.S. and Canada as an isolated exchange, (the loonie) should be trading lower."

Headland said that a lower loonie will be good news for exports, an area that Bank of Canada wants to see improve.

"The Bank of Canada wants a lower loonie. It'll drive exports. We're an export-led economy and that's what we need," he said.

Meanwhile, there was some positive economic news from the United States on Friday after some disappointment earlier in the week.

The third and final official estimate of U.S. second-quarter gross domestic product says the world's largest economy expanded at an annual rate of 4.6 per cent in the spring, the fastest pace in more than two years. It suggests the strong growth will help the economy build on momentum for expansion for the rest of the year.

The growth in the April to June quarter reported by the U.S. Commerce Department was in sharp contrast to a decline of 2.1 per cent for the first three months of the year, which included unusually harsh winter weather.

On Thursday, the U.S. Commerce Department said business orders for long-lasting manufactured goods fell by a record 18.2 per cent in August, dragged lower by a plunge in demand for commercial aircraft.

There was similarly disappointing news from the U.S. Labor Department, which said the number of people applying for unemployment benefits in the U.S. increased last week after falling sharply two weeks ago. Weekly applications rose by 12,000 to a seasonally adjusted 293,000 last month.

In commodities, November crude oil contract was up $1.01 at US$93.54 a barrel. December gold bullion dipped $6.50 to US$1,215.40 an ounce and December copper added a penny to US$3.04 a pound.

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