08/29/2014 08:54 EDT | Updated 10/29/2014 05:59 EDT

Canadian Dollar, Economy Up In Strong Q2 Rebound

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TORONTO - The Canadian dollar was higher Friday as data showed the economy grew more than expected in the second quarter.

The loonie was up 0.08 of a cent to 92.27 cents US as Statistics Canada reported gross domestic product ran up at an annual rate of 3.1 per cent, higher than the 2.7 per cent read that economists had expected.

First quarter growth was affected by a severe winter and GDP only posted a 1.2 per cent gain.

On a monthly basis, GDP climbed 0.3 per cent in June versus the 0.2 per cent rise that was forecast, the highest quarterly gain since the third quarter of 2011.

In the U.S., consumer spending remained lacklustre in July, as auto sales slipped from eight-year highs and retail sales stalled. Spending dropped 0.1 per cent, against the gain of 0.3 per cent that was generally expected.

Later in the morning, the Chicago purchasing managers index, a snapshot of manufacturing activity in the American Midwest, is expected to show greater expansion during August, rebounding to 56.

And strong stock market performance and falling gasoline prices were expected to spark an upward adjustment in the final estimate of the University of Michigan consumer sentiment index to 81 in August.

However, sentiment could turn negative going into the weekend as investors also watched the Ukraine conflict for signs of further escalation after the country’s president reported that Russian forces had entered the southeastern part of the country, which had largely escaped earlier fighting between Ukraine forces and pro-Russian militias.

NATO said at least 1,000 Russian troops are in Ukraine. Russian Foreign Minister Sergey Lavrov dismissed the accusations of an invasion, saying that Moscow “has not been presented with any facts” proving that it had happened.

On the commodity markets, October crude in New York gained 48 cents to US$95.03 a barrel.

December gold backed off $3.90 to US$1,286.50 an ounce while December copper gained two cents to US$3.17 a pound.


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