Canadian dollar rises amid weak U.S. economic data, mixed commodity prices

TORONTO – The Canadian dollar was higher Wednesday amid weak U.S. economic data

The loonie was ahead 0.09 of a cent to 93.17 cents US as the final revision to American economic growth in the first quarter showed that gross domestic product shrank a greater than expected 2.9 per cent, larger than the two per cent contraction economists had expected. However, the decline in economic performance was due in large part to severe winter weather.

Also, U.S. durable goods orders fell one per cent during May, against an expected one per cent gain. The drop was driven by sharp drop in demand for military equipment.

The loonie had dipped 0.15 of a cent Tuesday as the U.S. dollar strengthened in the wake of strong housing sales and consumer confidence data.

That still left the loonie up about a cent over the past week to a six month high as oil and gold prices advanced amid geopolitical concerns centred around a rising insurgency in Iraq and tensions between Ukraine and Russia.

The loonie had also found support from stronger than expected inflation data, which raised expectations that the Bank of Canada could raise interest rates sooner than thought.

On the commodity markets, August crude on the New York Mercantile Exchange gained 24 cents to US$106.27 a barrel.

Oil prices had risen steadily over the past couple of weeks amid a rising insurgency in Iraq. Prices stepped back over the last two days as fears receded that the insurgency would greatly affect the country’s oil production and exports.

However, U.S. benchmark crude futures rose Wednesday after The Wall Street Journal reported that the U.S. government was loosening a long-standing ban by letting two companies sell American oil internationally. The newspaper said the Obama administration would allow foreign buyers to purchase a type of ultralight oil known as condensate, which can be turned into gasoline, jet fuel and diesel.

Metal prices were lower with July copper off a cent to US$3.14 a pound while August bullion dropped $1.60 to US$1,319.70.