Canadian dollar up amid higher than expected growth, strong Chinese data

TORONTO – The Canadian dollar was higher Friday as the currency continued to find lift from data showing stronger than expected economic growth during August and encouraging Chinese manufacturing data.

The loonie rose 0.08 of a cent to 95.98 cents US.

The currency had advanced over half a U.S. cent Thursday after Statistics Canada said that gross domestic product grew by 0.3 per cent in August against the 0.2 per cent rise that was expected.

On Friday, HSBC Corp. said Friday its monthly purchasing managers’ index for China showed its best improvement in seven months, rising to 50.9 from September’s 50.2. Anything above 50 indicates expansion.

An industry group, the China Federation of Logistics and Purchasing, said its index rose to 51.4 from the previous month’s 51.1.

China’s economic growth rebounded to 7.8 per cent in the three months ended in September from the previous quarter’s two-decade low of 7.5 per cent.

Strong Chinese data helps lift commodity prices, which in turn supports the Canadian dollar.

Commodities were mixed Friday with December crude on the New York Mercantile Exchange down 50 cents to US$95.88 a barrrel.

But the strong Chinese data helped push December copper two cents higher to US$3.32 a pound while December bullion moved $11.40 lower to US$1,312.30 an ounce.

Meanwhile, traders looked ahead to the latest reading on the American factory sector.

BMO Capital Markets looked for the October reading of the U.S. Institute for Supply Management’s manufacturing index to indicate slowing expansion, moving down to 55 from 56.2 in September.

The data will also be carefully weighed as to how it might affect the timing of the U.S. Federal Reserve in cutting back on a key stimulus program, its monthly purchases of US$85 billion of bonds.

The Fed announced earlier this week it could carry on with the program, which is credited with keeping long term rates low and therefore encouraging more people to buy equities. But there is much speculation about when the Fed might start to taper those asset purchases.