The Canadian Dollar was softer against the Euro on Friday after the single currency was bolstered by better than forecast inflation data.
The ‘Loonie’ managed to push higher against the Pound and climbed against its US relation after data released by Statistics Canada showed that the Canadian economy expanded more than expected in the fourth quarter of last year. GDP grew at an annualised pace of 2.9% in the final quarter and beat the previous quarter’s growth rate of 2.7%. Economists had been forecasting growth of 2.6%.
A monthly basis however the data disappointed. Harsh winter weather saw GDP fall by 0.5%, the biggest monthly drop recorded since 2009. Despite that the report was generally positive and signalled to investors that the Canadian economy looks set to grow further over the course of the year.
“With the understanding that part of the broad weakness seen in December can be ascribed to severe weather conditions, payback can be expected, although it is yet unclear the extent to which Canada has been affected by the weather in January,” said an economist at Capital Markets.
The overall positive data, along with upward revisions for the first half of 2013, suggests that the world’s 11th largest economy is reducing what Bank of Canada Governor Stephen Poloz recently called ‘significant slack’. Poloz said it will take about two years to reach full output and economists predict that he will keep his benchmark interest rate at 1% at the Central Bank’s policy announcement next week.
The Euro remained supported after it surged against its peers after the news broke that the regions inflation rate rose to 0.8%, the same pace seen in the previous two months and beat economist expectations for a fall to 0.7%.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.3806 ,
Euro,,British Pound,0.8257 ,
Euro,,Australian Dollar,1.5412 ,
Euro,,Canadian Dollar,1.5313 ,