Canadian dollar slightly lower, economic growth comes in stronger than expected

TORONTO – The Canadian dollar was slightly lower Friday morning as the latest reading on economic growth came in better than forecast and commodity prices declined.

The loonie was off the lows of the morning but still down 0.04 of a cent to 97.05 cents US as Statistics Canada reported that the economy expanded at an annualized rate of 2.5 per cent during the first quarter, which was higher than the 2.3 per cent reading that had been expected.

The agency also revised growth for last year’s fourth quarter higher, saying GDP rose at an annualized rate of 0.9 per cent, versus the original reading of 0.6 per cent.

Statistics Canada also said that GDP growth for March came in at 0.2 per cent, higher than the 0.1 per cent rise that economists had expected.

At the same time, other data showed that Americans cut back on spending in April after their income failed to grow.

The Commerce Department says consumer spending dropped a seasonally adjusted 0.2 per cent in April, the most since last May. That follows a 0.1 per cent increase in March.

Income was unchanged last month, after a 0.3 per cent rise in March.

Other data out later in the morning is expected to show that a key reading on manufacturing in the U.S. Midwest showed continued contraction. The Chicago Purchasing Managers Index for May is expected to come in at 49.9, which would be an improvement than the 3.5-year low of 49 posted in April.

And the final reading of the University of Michigan’s consumer sentiment survey for May is expected to edge up to 83.8, which would be the best level in more than six years.

Commodity prices were weak with July crude on the New York Mercantile Exchange down 57 cents to US$93.04 a barrel.

July copper edged three cents lower to US$3.29 a pound while June gold was down $2.20 to US$1,409.30 an ounce.