The Canadian dollar weakened against the greenback on Wednesday as the U.S. currency was boosted by stronger economic growth figures and ahead of data that will show how the domestic economy fared at the start of the year.
U.S. gross domestic product expanded at a 2.9 per cent annual rate in the final three months of 2017, instead of the previously reported 2.5 per cent, the Commerce Department said in its third GDP estimate for the period on Wednesday.
The figures helped lift the greenback 0.8 per cent against a basket of currencies to the detriment of the loonie.
“The revision to the data today showed that the economy is doing quite strongly in the U.S., so that obviously bodes well for the U.S. dollar and the likelihood that the Fed will keep their path toward raising rates,” said Rahim Madhavji, president at KnightsbridgeFX.com.
At 4:25 p.m. EDT (2025 GMT), the Canadian dollar was trading down 0.3 per cent at $1.2925 to the greenback, or 77.37 U.S. cents.
Investors will get a look at monthly Canadian GDP on Thursday, with economic growth expected to have picked up by just 0.1 per cent in January.
Canada is coming off an exceptionally strong 2017, and analysts are looking to see how much growth can be sustained following three interest rate increases and tighter mortgage regulations that are expected to dampen the housing market.
“I think what people are focusing on is what’s the tone of growth, where is the economy going and whether or not there’s enough strength in the economy and enough momentum to continue to see the Bank of Canada’s pricing around two rate hikes this year continue to hold up,” said Mark McCormick, North American head of FX strategy at TD Securities in Toronto.
Ontario was the latest province to release its budget, saying late on Wednesday it would boost spending on health care and child care as it made a swift return to running deficits and projected a long road back to balance.
Canadian government bond prices were higher across the maturity curve, with the two-year price up 4.5 Canadian cents to yield 1.806 per cent and the benchmark 10-year rising 20 Canadian cents to yield 2.119 per cent.