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CANADA FX DEBT-Robust economic growth helps Canadian dollar trim April decline

reuters.com · 04/29/2022 09:35
CANADA FX DEBT-Robust economic growth helps Canadian dollar trim April decline

Canadian dollar strengthens 0.5% against the greenback

For April, the loonie is on track to weaken 1.9%

Canadian GDP rises 1.1% in February

Canadian bond yields move higher across curve

- The Canadian dollar strengthened against its U.S. counterpart on Friday as domestic data showing strong economic growth supported bets for a series of upsized interest rate hikes by the Bank of Canada, but the currency was still headed for a monthly decline.

The loonie CAD= was trading 0.5% higher at 1.2735 to the greenback, or 78.52 U.S. cents, recovering from its lowest intraday level in more than seven weeks on Thursday at 1.2879.

For the month, the currency was on track to weaken 1.9% as the war in Ukraine, COVID-19 lockdowns in China and the potential for aggressive interest rate hikes by the Federal Reserve spooked investors worried about the global economic outlook.

Canadian gross domestic product rose by 1.1% in February, beating estimates, Statistics Canada data showed. March GDP was seen up 0.5% in a flash estimate, with the annualized Q1 GDP likely to be up 5.6%. nSCLTFEI1I

Money markets expect the Bank of Canada to hike interest rates by at least half a percentage point at each of the next three meetings to tackle inflation. The central bank hiked by that increment earlier this month, marking its biggest single increase in 22 years.

The price of oil, one of Canada's major exports, rose for a fourth day on fears over Russian supply disruption. nL2N2WR02V

U.S. crude CLc1 prices were up 1.1% at $106.48 a barrel, while the safe-haven U.S. dollar pulled back from 20-year highs and Chinese authorities' pledged to support economic growth, offering respite to battered equity markets. nL2N2WR0PG

Canadian government bond yields were higher across the curve. The 10-year CA10YT=RR climbed 8.2 basis points to 2.869%, moving back in reach of the 11-year high notched last week at 2.944%.

(Reporting by Fergal Smith, Editing by Louise Heavens)

((fergal.smith@thomsonreuters.com; +1 647 480 7446;))