The Canadian dollar strengthened against its U.S. counterpart on Friday as data showing faster-than-expected growth in the domestic economy offset volatility on Wall Street, with the loonie clawing back some of this week’s decline.
Canada’s economy grew by 0.7 per cent in November, surpassing estimates for a 0.4 per cent gain, data from Statistics Canada showed. A preliminary estimate pointed to a 0.3 per cent advance for December GDP, while fourth-quarter annualized growth was seen at 7.8 per cent.
Investors reacted to the data after it showed the Canadian economy doing better than expected “despite lockdowns and COVID concerns,” said Darren Richardson, chief operating officer at Richardson International Currency Exchange Inc.
Canada’s major airlines have agreed to suspend all flights to Mexico and the Caribbean for three months starting on Sunday as the country’s COVID-19 vaccine rollout suffered another setback, Prime Minister Justin Trudeau said.
The Canadian dollar was trading 0.4 per cent higher at 1.2780 to the greenback, or 78.25 U.S. cents, having traded in a range of 1.2738 to 1.2874.
For the week, the loonie was down 0.4 per cent, after a volatile few days on Wall Street. U.S. stock indexes slumped on Friday as investors gauged the effectiveness of Johnson & Johnson’s COVID-19 vaccine, while a standoff between Wall Street hedge funds and small, retail investors contributed to volatility.
Still, data from the U.S. Commodity Futures Trading Commission showed that speculators have raised their bullish bets on the Canadian dollar. As of Jan. 26, net long positions had increased to 13,770 contracts from 10,326 in the prior week.
The price of oil, one of Canada’s major exports, settled 0.3 per cent lower at $52.20 a barrel, while Canadian government bond yields were mixed across a steeper curve in sympathy with U.S. Treasuries. The 10-year rose 2.7 basis points to 0.901 per cent.
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