The Loonie extended its losses versus its U.S. counterpart after a report showed Canada’s economy unexpectedly contracted in May by the most in two years as production in the mining and oil and gas sector declined.
Canada’s currency fell versus a majority of its major counterparts as a report showed the U.S. economy grew less than forecast in the second quarter, after almost coming to a halt at the start of the year, as consumers retrenched. Crude oil, Canada’s largest export and global equities, traditional drivers of Canada’s dollar, declined.
“The fact that Canada and GDP weren’t great just took a toll on the Canadian dollar,” said Brian Kim, a currency strategist in Stamford, Connecticut, at Royal Bank of Scotland Group Plc. “Disappointing GDPs in North America in general are not helping the currency.
Bloomberg
The U.S. economy grew less than forecast in the second quarter, after almost coming to a halt at the start of the year, as consumers retrenched.
Gross domestic product rose at a 1.3 percent annual rate following a 0.4 percent gain in the prior quarter that was less than previously estimated, Commerce Department figures showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 1.8 percent increase. Household purchases, about 70 percent of the economy, climbed 0.1 percent.
Slower job and income gains raise the risk that a pickup in purchases during the remainder of 2011 will fail to materialize. The faltering economy may get another blow from spending cuts being negotiated in Congress and is one reason why Federal Reserve Chairman Ben S. Bernanke has said policy makers need to keep all options open.
Bloomberg
Analysts were caught offside by this morning’s Non-Farm Payroll report indicating that unemployment declined from 9.4 percent in December to to 9.0 percent. Total employment rose by 36,000 which is the slowest rate in four months but winter storms are being blamed as the construction and transportation sectors were forced to scale back operations in December.
“We’re moving in the right direction, though payrolls are still at extremely low levels,” Omair Sharif, an economist at RBS Securities Inc. in Stamford, Connecticut, said before the report. “We’re just digging ourselves out of a real big hole and it’s going to take time.”
Source: Bloomberg
The number of new claims for jobless benefits for the week ended July 24th, fell by 11,000 from the week before to 457,000 new claims. Overall however, the number of people receiving unemployment benefits increased raising concerns that job growth in the US is slowing.
“It does feel like there’s been a little bit of a deceleration in the pace of hiring,” Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut, said before the report. “It relates to a lot of fear and uncertainty around the sustainability of the recovery.”
Source: Bloomberg
