Canadian dollar posts a fourth-month high on GDP data, weaker greenback

Tue Jan 31, 2017 4:38pm EST
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By Fergal Smith

TORONTO (Reuters) - The Canadian dollar notched a four-month high against its U.S. counterpart on Tuesday after domestic data showed the economy expanded more than expected in November and the greenback tumbled against a basket of major currencies.

The U.S. dollar index .DXY slumped below the 100.00 threshold after comments by U.S. President Donald Trump and his trade adviser stoked expectations that the new U.S. administration was targeting a weaker greenback.

"A large part of what Canada has been through has been a bloom coming off the rose for the U.S. dollar," said Mark Chandler, head of Canadian fixed income and currency strategy.

Many market participants had bought U.S. dollars on the hope of policies such as tax reform, but without worrying about parts of Trump's policy agenda that hinder growth, Chandler added.

The Canadian economy grew 0.4 percent in November from October, helped by a rebound in manufacturing. That beat the 0.3 percent increase forecast by analysts.

U.S. crude CLc1 prices settled 18 cents higher at $52.81 a barrel, helped by news that major suppliers cut production this month more than forecasters had expected. [O/R]

Oil is one of Canada's major exports.

The Canadian dollar CAD=D4 ended at C$1.3012 to the greenback, or 76.85 U.S. cents, stronger than Monday's close of C$1.3120, or 76.22 U.S. cents.   Continued...

A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch