The Canadian dollar closed higher Friday amid data showing that the economy continued to register respectable growth in November.
The loonie ended with a 0.22-cent gain at 89.78 cents (U.S.) as Statistics Canada reported that gross domestic product grew by 0.2 per cent, which was in line with expectations. That was down slightly from a 0.3 per cent gain in October.
“The slowing in November GDP was not unexpected after very strong increases in October and September of 0.3 per cent,” observed Royal Bank of Canada assistant chief economist Paul Ferley.
“There is the risk of a more pronounced slowing in December for which inclement weather in the final two weekends before Christmas may even result in activity declining marginally in the month.”
The U.S. dollar had been higher earlier in the morning with traders in a risk-averse mood after data raised worries about the euro zone slipping into deflation.
Eurostat, the EU’s statistics office, reported that inflation in the euro zone fell to 0.7 per cent in the 12 months to January from 0.8 per cent the previous month.
There are concerns that the euro zone could slip into a situation where prices are actually falling. Such a development can hurt an economy as consumers delay purchases and businesses postpone investment.
The deflation concerns added to emerging-market worries that have buffeted markets this past week.
Countries including Turkey, South Africa, India and Russia have seen their currencies slide sharply over the past week. Traders worry that growth will slow and money will flow out of their economies as the U.S. Federal Reserve tightens its monetary policy.
Other economic data released Friday showed that U.S. consumer spending rose 0.4 per cent in December, compared with November when spending had increased an even stronger 0.6 per cent. That was the best gain in five months.
For all of 2013, income growth was 2.8 per cent, the weakest performance since 2009.
On the commodity markets, March crude in New York fell 74 cents to $97.49 a barrel.
March copper lost 3 cents to $3.20 a pound while April gold moved $2.70 lower to $1,239.80 an ounce.