Canadian dollar gains 0.4% against the greenback
Touches an 11-day high at 1.3626
Canada’s fourth-quarter GDP decreases 0.6% on annualized basis
Ten-year yield approaches three-month low
TORONTO, Feb 27 (Reuters) – The Canadian dollar clawed back most of its monthly losses against the US dollar on Friday as broad-based declines for the greenback offset domestic data that showed the economy contracting in the fourth quarter.
The loonie was trading 0.4% higher at 1.3630 per US dollar, or 73.37 US cents, after touching its strongest level since February 16 at 1.3626. Among the Group of 10 currencies, only the safe-haven Swiss franc posted stronger gains. Another safe-haven is gold. It rose to nearly a one-month high, supported by geopolitical tensions after the US and Iran extended nuclear talks.
“With gold rallying, the USD has come under pressure and that has helped to propel USD-CAD lower,” said George Davis, chief technical strategist at RBC Capital Markets, adding that month-end flows could also have helped support the loonie, which was down 0.1% in February. The US dollar edged lower against a basket of major currencies, while the price of oil rose 2.7% to $66.99 a barrel as traders remained on alert for potential supply disruptions. Oil is one of Canada’s major exports. Canadian Prime Minister Mark Carney will meet business leaders in Mumbai and start talks on a comprehensive trade agreement, which is expected to be completed by November, Canada’s foreign minister told Reuters.
Canada’s gross domestic product fell at an annualized pace of 0.6% in the October–December quarter as manufacturers dipped heavily into inventories to meet demand, closing out the slowest year of growth for the country since 2020. Economists and the Bank of Canada had expected a flat reading.
“The Canadian economy continues to struggle and track somewhat weaker than the Bank of Canada’s latest MPR (Monetary Policy Report) projections, although some of the underlying detail in today’s report was admittedly stronger than the headline figure,” Andrew Grantham, a senior economist at CIBC Capital Markets, said in a note.
Canadian government bond yields eased across the curve, tracking moves in US Treasuries. The 10-year was down 3.6 basis points at 3.139%, marking its lowest level since November 28. (Reporting by Fergal Smith; Editing by Paul Simao)