By Commodity News Service Canada
WINNIPEG, September 30 – The Canadian dollar dropped lower relative to the U.S. dollar on Tuesday, reacting to disappointing Canadian gross domestic product (GDP) data, analysts said.
According to Statistics Canada, real GDP was basically unchanged in July, following six consecutive months of gains. Pre-report expectations called for GDP growth of 0.2 per cent in July.
The Canadian dollar closed at U.S.$0.8929 or U.S.$1=C$1.1200 on Tuesday, which compares with Monday’s North American settlement of U.S.$0.8966 or U.S.$1=C$1.1153.
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A strengthening U.S. dollar, as traders are speculating the U.S. Federal Reserve will raise interest rates sooner than first anticipated, also accounted for the loonie’s softness.
A sharp decline in gold and crude oil prices Tuesday, due to recent disappointing Chinese economic data and the firmer U.S. dollar, further undermined the Canadian currency.
Traders were looking ahead to Friday, when the latest U.S. job figures will be released. Pre-report expectations call for 210,000 newly created U.S. jobs in September, brokers say.
Canadian bonds ended sharply lower on Tuesday, as traders were liquidating positions ahead of the end of the month and quarter, participants said.
The two-year bond yielded 1.128% late Tuesday, from 1.119% late Monday. The 10-year bond yielded 2.152%, from 2.125%. Bond yields fall as their prices rise.
