Canadian Dollar Flat As Investors Weigh August GDP, Crashing Oil Prices

The  Canadian dollar is struggling for  direction against a  plethora of  currencies at  the  end of  the  trading week as  investors balance a  slightly better-than-expected gross domestic product (GDP) in  August and  cratering crude oil prices. The  loonie was impacted earlier this week after the  central bank forecast that a  recovery would not occur until 2022.

According to  Statistics Canada, the  economy expanded 1.2% in  August, down from the  3.1% jump in  July. The  market had penciled in  an  expansion of  0.9%. This represented the  fourth consecutive monthly GDP gain, driven by  a  rebound in  professional services (2.2%), public sector spending (1.9%), construction activity (1.5%), and  manufacturing (1.2%).
In  September, producer prices fell both month-over-month and  year-over-year. The  producer price index (PPI) dipped 0.1% in  September, down from the  0.3% boost in  August. Raw material prices also tumbled at  an  annualized rate of  9.4% in  September, down from the  7.5% plunge in  the  previous month.
On  Thursday, it was reported that building permits surged 17% in  September, up from a  tepid 1.4% gain in  August. Average weekly earnings climbed 7.9% year-over-year in  August, slightly down from the  8.2% increase in  July.
The  October IHS Markit manufacturing purchasing managers’ index (PMI) will be released on  Monday.
Earlier this week, the  Bank of  Canada (BoC) announced that it would leave its benchmark interest rate at  0.25% for  the  eighth consecutive month. The  central bank reduced its large-scale asset-buying, also known as  quantitative easing, by  $1 billion to  $4 billion per week. The  big revelation from the  October policy meeting was that officials do not foresee an  economic recovery for  two more years.
Meanwhile, crashing energy prices weighed on  the  loonie to  close out the  trading week. December West Texas Intermediate (WTI) crude oil futures tumbled $0.75, or  2.07%, to  $35.42 per barrel on  the  New York Mercantile Exchange. December natural gas futures were flat at  $3.414 per million British thermal units (btu).
Since Canada maintains a current account deficit, it relies heavily on exports to grow the economy. Oil and gas remain the country’s top exports, so any substantial change in prices — high or low — can affect the Great White North and the loonie.
The  bond market was green across the  board. The  benchmark 10-year bond rose 0.019% to  0.651%. The  three-year note edged up 0.017% to  0.276%, while the  30-year bond jumped 0.025% to  1.242%.
The  USD/CAD currency pair rose 0.09% to  1.3339, from an  opening of  1.3328, at  15:37 GMT on  Friday. The  EUR/CAD inched up 0.06% to  1.5565, from an  opening of  1.5556.
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