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A Canadian dollar coin and an American dollar sit in front of a scale in Quebec City, on April 7, 2010. (JACQUES BOISSINOT/THE CANADIAN PRESS)
A Canadian dollar coin and an American dollar sit in front of a scale in Quebec City, on April 7, 2010. (JACQUES BOISSINOT/THE CANADIAN PRESS)

Loonie falls as data shows sharp rebound in U.S. economic growth Add to ...

The Canadian dollar was lower Wednesday as data showed that the U.S. economy rebounded strongly in the second quarter.

The loonie was down 0.42 of a cent to 91.67 cents US as gross domestic product in the U.S. grew a much better than expected four per cent after contracting in the January-March period because of severe winter weather. That contraction was revised lower to 2.1 per cent from 2.9 per cent.

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The data was released a day before Statistics Canada reports gross domestic product data for May.

Traders also took in some positive employment news two days before the release of the American government’s employment report for July. Payroll firm ADP reported that 218,000 jobs were created in the private sector during the month. Analysts looked for the U.S. government report to show that about 230,000 jobs were created during July.

Canadian jobs data for July comes out on August 8.

Meanwhile, the U.S. Federal Reserve makes its scheduled announcement on interest rates later in the day (at 2 p.m. EDT).

Traders will look for any hint that the central bank could start to hike rates sooner than anticipated. Markets generally expect the Fed to start hiking rates away from near zero in mid-2015.

The Fed is also expected to further reduce the monthly pace of its bond purchases by another $10 billion to $25 billion, and signal that it intends to end its latest round of quantitative easing in October.

On the commodity markets, oil prices lost early momentum from the economic growth data and September crude slipped 14 cents to US$100.83.

September copper was two cents higher at US$3.24 a pound while August bullion was off $5 to US$1,293.30 an ounce.

Meanwhile, traders tried to assess the effect of the latest round of sanctions against Russia. The TSX closed flat Tuesday while New York registered losses after the U.S. and the European Union announced expanded sanctions in response to the recent downing of a Malaysian airliner over an area of Ukraine controlled by pro-Russian separatists.

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