CANADA FX DEBT-C$ erases losses after strong Q1 domestic GDP data

Fri May 31, 2013 9:37am EDT
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* C$ at C$1.0307 to US$, or 97.02 U.S. cents

* Q1 GDP growth beats expectations, BOC forecast

* C$ hits strongest level in two years vs Aussie

* Bond prices rise across the curve

By Alastair Sharp

TORONTO, May 31 (Reuters) - The Canadian dollar erased losses against the U.S. dollar early on Friday after data showed the country's economy grew at a faster-than-expected pace in the first quarter.

Stronger exports helped rouse the Canadian economy from its sluggish end to 2012, with annualized economic growth of 2.5 percent exceeding the median projection of analysts in a Reuters poll and easily beating the central bank's lowered forecast.

"It's mildly supportive for the currency, we had some slightly disappointing numbers out of the U.S. as well at the same time as slightly better-than-expected numbers on the Canadian side, so it was a good combination for the Canadian dollar," said BMO Capital Markets Chief Economist Doug Porter.

U.S. consumer spending fell in April for the first time in almost a year and inflation pressures were subdued in the world's largest economy and Canada's main trading partner.   Continued...