By Commodity News Service Canada
WINNIPEG, March 3 – The Canadian dollar closed stronger relative to the US dollar on Tuesday, underpinned by positive Canada economic growth data, analysts said.
Statistics Canada reported real gross domestic product (GDP) grew 0.6 per cent in the final quarter of 2014. In December, GDP grew 0.3 per cent, beating expectations of a 0.2 per cent rise.
The Canadian dollar closed at US$0.8006 or US$1=C$1.2490 on Tuesday, which compares with Monday’s North American settlement of US$0.7978 or US$1=C$1.2535.
Expectations that the Bank of Canada will keep interest rates unchanged at their announcement Wednesday were also supportive, as traders first anticipated another interest rate cut. Though, the squaring of positions ahead of the announcement trimmed some of the loonie’s gains.
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Renewed weakness in crude oil values and ongoing worries about the negative effect it will have on Canada’s economy also limited the upside.
Canadian bonds moved lower on Tuesday, reacting to the better than expected Canadian GDP data, according to market watchers.
The two-year bond yielded 0.499% Tuesday, from 0.494% late Monday. The 10-year bond yielded 1.431%, from 1.378%. Bond yields rise as their prices fall.
