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Canadian dollar rises as US growth composition weighs on greenback
THE Canadian dollar strengthened against its US counterpart on Friday, following data that showed factors driving faster growth in the US economy are likely to be temporary.
US economic growth accelerated in the first quarter, but the burst in growth was driven by trade and the largest accumulation of unsold goods since 2015, factors that are likely to reverse in the coming quarters.
"Really it is all about the market's response to the GDP numbers we got out of the US this morning," said Eric Theoret, a currency strategist at Scotiabank.
"It hasn't been much of a loonie related move so much as a US dollar move."
The US dollar fell against a basket of currencies, while the price of oil, one of Canada's major exports, retreated from its strongest bull run in at least a year after US President Donald Trump again pressured the Organization of the Petroleum Exporting Countries to raise crude production to ease petrol prices.
US crude prices settled 2.9 per cent lower at US$63.30 a barrel.
Speculators have cut their bearish bets on the Canadian dollar, data from the US Commodity Futures Trading Commission and Reuters calculations showed.
As at April 23, net short positions had fallen to 47,493 contracts after rising to the highest since January at 49,162 in the prior week.
At 4.17 pm (2017 GMT) on Friday, the Canadian dollar was trading 0.2 per cent higher at 1.3458 to the greenback, or 74.31 US cents.
The currency, which on Wednesday touched a nearly four-month low at 1.3522, traded in a range of 1.3452 to 1.3498.
Gains for the loonie came after Bank of Canada governor Stephen Poloz said on Thursday that the central bank could start raising rates again "sometime down the road".
On Wednesday, the Bank of Canada held rates steady but took a more dovish stance than in recent releases, removing wording around the need for "future hikes", while lowering its growth forecasts for 2019.
For the week, the loonie fell 0.5 per cent. REUTERS