CANADA FX DEBT-C$ falls on U.S. dollar rally on GDP; ECB rate cut
By Solarina Ho TORONTO, Nov 7 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Thursday after data showed the U.S. economy grew faster than expected in the third quarter and jobless claims fell in the latest week. The U.S. dollar rallied after data showed U.S. gross domestic product expanded at a 2.8 percent annual rate, the quickest pace since the third quarter of 2012. Economists had expected a 2.0 percent rate. Businesses restocked shelves, but a slowdown in consumer and business spending pointed to underlying weakness. "Certainly top line coming in at 2.8 looks great, but the beneath the details there are some things that might take off the shine off the headline figure," said Mazen Issa, macro strategist TD Securities, noting the slower consumer spending. "(It's) a much more positive story for the U.S. economy, which is providing a large boost on the U.S. dollar and consequently outperforming relative to the Canadian dollar." Also surprising markets was the unexpected interest rate cut by the European Central Bank, which sent the euro falling to a seven-week low against the U.S. dollar. The Canadian dollar hit its firmest level against the euro in more than a month after the ECB cut its main refinancing rate to a record low of 0.25 percent. "The effect of it will be fairly marginal, but it's more of symbolic move given that inflation has decelerated in Europe," said Issa. "Certainly CAD (the Canadian dollar) has been one of the beneficiaries following that decision." The Canadian dollar, which was mostly outperforming other currency counterparts, was trading at C$1.0435 versus the greenback, or 95.83 U.S. cents at 9:45 a.m. (1445 GMT), slightly off Wednesday's finish at C$1.0418, or 95.99 U.S. cents. It was trading at C$1.3949 versus the euro, or 0.7169 euro cents. Looking ahead, investors were also eyeing North American jobs data, due for release on Friday. Economists are expecting 125,000 jobs added in the United States and 13,000 new jobs created in Canada for the month of October. Government bond prices were mostly higher across the maturity curve, with the two-year bond rising 3.5 Canadian cents to yield 1.103 percent. The benchmark 10-year bond was slightly higher, up 4 Canadian cents to yield 2.533 percent.
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