TORONTO - The Canadian dollar was lower late morning Wednesday as economic growth data for the U.S. came in worse than expected. At the same time, other data showed Canadian economic growth meeting expectations.
The loonie was down 0.13 of a cent to 91.19 cents US as U.S. gross domestic product grew at an annual rate of only 0.1 per cent during the first quarter, far below expectations for 1.2 per cent growth. The poor performance was blamed on severe winter weather.
Meanwhile, Statistics Canada reported that Canadian GDP grew 0.2 per cent during February, which was in line with expectations. That translated to annualized growth of 2.5 per cent.
There was positive employment news two days before the release of the U.S. government's employment report for April. Payroll firm ADP said that the private sector created 220,000 jobs during the month. Economists generally expected the economy created a total of about 210,000 jobs.
Canadian employment data for April will be released on May 10.
Markets also considered comments from Bank of Canada governor Stephen Poloz that Canada is missing out on about $40 billion in export sales and could continue to do so for years to come as uncompetitive producers continue to lose market share.
The central banker, who testified before the Commons finance committee, said the bottom line is that the “wedge” that has opened up in the non-energy export sector is the new reality and is not going away in the near future. Poloz said that the loss in export capacity has been the principal reason Canada’s economy continues in the slow lane at about two per cent growth and Canadian firms have been holding back on investments and hiring.
Later in the day, the U.S. Federal Reserve wraps up its two-day interest rate meeting.
Meanwhile, the Fed was expected to stick to plans to reduce monthly bond purchases by $10 billion this month and provide further insight into the state of the world’s biggest economy.
Traders will also look for further indications of when the Fed might start to raise short-term interest rates, which have been near zero since the financial crisis.
On the commodity markets, June crude in New York was down $1.81 to US$99.47 a barrel.
June gold declined $3.70 to US$1,292.60 an ounce while July copper shed four cents to US$3.03 a pound.