The Canadian dollar rallied today ahead of tomorrow’s report about gross domestic product as the nation’s current account deficit shrank last quarter. The currency remains strong, though it was trading sideway’s lately.
Canada’s current account deficit narrowed by $3.3 billion to $12.4 billion in the first quarter of this year on a seasonally adjusted basis, exactly as forecasters predicted. The report said:
This increase was led by an improved trade in goods balance, which recorded a first surplus in more than two years.
The domestic data helped the loonie, while hopes for continuing economic recovery in the United States, Canada’s biggest trading partner, supported the bullish momentum.
The GDP report will be released tomorrow and it is expected to show growth by 0.1 percent in March, smaller than February’s growth of 0.2 percent. If the actual report is better than expected than it should help to maintain the bullish momentum for the loonie. By the same token, worse-than-expected result can damage the currency’s performance.
USD/CAD declined from 1.0874 to 1.0839 and EUR/CAD fell from 1.4777 to 1.4743 as of 23:32 GMT today. CAD/JPY gained from 93.62 to 93.84 following the previous drop to 93.32.
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