The Canadian dollar strengthened against its U.S. counterpart on Wednesday and was on track to advance for a fourth straight quarter as data showed faster-than-expected growth in the domestic economy.
The Canadian economy grew by 0.7 per cent in January, surpassing estimates for 0.5 per cent, largely on increases in wholesale trade and manufacturing, Statistics Canada said. A flash estimate pointed to a 0.5 per cent gain in February.
“The growth outlook for this year continues to brighten amid sizable fiscal stimulus, an ultra-accommodative central bank, and good news on the vaccines,” said Ryan Brecht, a senior economist at Action Economics.
Pfizer Inc has agreed to accelerate the delivery of its COVID-19 vaccine to Canada, and some doses of the Johnson & Johnson inoculation are due to arrive at the end of April, Canadian officials said on Tuesday.
The Canadian dollar was 0.3 per cent higher at 1.2597 to the greenback, or 79.38 U.S. cents, having recovered from its lowest intraday level in nearly three weeks on Tuesday at 1.2646.
For the month, the loonie was on track to gain 1.1 per cent, while it was also up 1.1 per cent since the start of the year, the strongest performance among G10 currencies.
The U.S. dollar notched a one-year high versus the yen and multi-month peaks with other currencies as investors bet that fiscal stimulus and aggressive vaccinations will help the United States lead a global pandemic recovery.
Canada sends about 75 per cent of its exports to the United States, including oil. U.S. crude prices were down 0.3 per cent at $60.35 a barrel on concerns about the market’s recovery after OPEC and its allies lowered its 2021 demand growth forecast, although strong Chinese factory activity lent some support.
Canadian government bond yields were higher across much of the curve, with the 10-year up 1.2 basis points at 1.546 per cent.
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