Canadian Dollar Declines Against US Dollar on Weak GDP Data

The Canadian dollar today declined against its US counterpart after the release of Canada’s GDP data for August causing the USD/CAD currency pair to hit new highs. Other releases from the US docket such as the consumer confidence index for October, which beat expectations, served to boost the US dollar against its Canadian peer.

The USD/CAD currency pair rallied by over 90 points from its daily lows to hit a high of 1.2914 after the release of the Canadian GDP data.

The release of Canada’s GDP data for the month of August by Statistics Canada in the early North American session triggered the loonie’s decline against the greenback. The GDP figures released indicated that Canada’s GDP contracted by 0.1% in August as opposed to the expected 0.1% expansion. This led to the annualized GDP growth missing expectations by coming in at 3.5% as compared to the expected 3.6% growth rate. Canada’s raw materials index also contracted by 0.1%, versus the expected 0.3% increase.

The release of the US employment cost index  by the Bureau of Labor Statistics also lifted the greenback as it met expectations by coming in at 0.7%. The release of the ISM Chicago purchasing managers index, which beat expectations by coming in at 66.2 versus the expected 60, also boosted the greenback. The consumer confidence index for October released by the Conference Board, which hit new 17-year highs, also contributed to the rally.

The currency pair’s future performance is likely to be influenced by BoC Governor, Stephen Poloz‘s testimony before the finance committee scheduled for 19:30 GMT.

The USD/CAD currency pair was trading at 1.2896 as at 16:33 GMT having rallied from a low of 1.2820 earlier today. The CAD/JPY currency pair was trading at 88.15 having risen from a daily low of 87.79.

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