By Solarina Ho
TORONTO, Nov 7 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Thursday after data showed the
U.S. economy grew faster than expected in the third quarter and
jobless claims fell in the latest week.
The U.S. dollar rallied after data showed U.S. gross
domestic product expanded at a 2.8 percent annual rate, the
quickest pace since the third quarter of 2012. Economists had
expected a 2.0 percent rate.
Businesses restocked shelves, but a slowdown in consumer and
business spending pointed to underlying weakness.
"Certainly top line coming in at 2.8 looks great, but the
beneath the details there are some things that might take off
the shine off the headline figure," said Mazen Issa, macro
strategist TD Securities, noting the slower consumer spending.
"(It's) a much more positive story for the U.S. economy,
which is providing a large boost on the U.S. dollar and
consequently outperforming relative to the Canadian dollar."
Also surprising markets was the unexpected interest rate cut
by the European Central Bank, which sent the euro falling to a
seven-week low against the U.S. dollar.
The Canadian dollar hit its firmest level against the euro
in more than a month after the ECB cut its main refinancing rate
to a record low of 0.25 percent.
"The effect of it will be fairly marginal, but it's more of
symbolic move given that inflation has decelerated in Europe,"
said Issa. "Certainly CAD (the Canadian dollar) has been one of
the beneficiaries following that decision."
The Canadian dollar, which was mostly outperforming
other currency counterparts, was trading at C$1.0435 versus the
greenback, or 95.83 U.S. cents at 9:45 a.m. (1445 GMT), slightly
off Wednesday's finish at C$1.0418, or 95.99 U.S. cents.
It was trading at C$1.3949 versus the euro, or 0.7169 euro
Looking ahead, investors were also eyeing North American
jobs data, due for release on Friday. Economists are expecting
125,000 jobs added in the United States and 13,000 new jobs
created in Canada for the month of October.
Government bond prices were mostly higher across the
maturity curve, with the two-year bond rising 3.5
Canadian cents to yield 1.103 percent. The benchmark 10-year
bond was slightly higher, up 4 Canadian cents to
yield 2.533 percent.
- Budget, Tax & Economy