USD/CAD Slumps on Bullish Canada Inflation Data
The dollar pared gains on Thursday following a mixed bag of economic data showing US economic growth cooled but losses were limited amid expectations the Federal Reserve will continue on its monetary policy tightening path.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.05% to 92.89.
The dollar came under pressure giving up most of its gains as investors had to contend with economic data showing manufacturing growth remained firm, while overall US economic growth in the third quarter fell short of expectations.
The Commerce Department said third quarter gross domestic product (gdp) expanded at a 3.2% annual rate. That missed economists’ forecasts of a 3.3% rise but was above the 3.1% growth in the second quarter and the quickest rise since the first quarter of 2015.
The Philadelphia Fed said Thursday its manufacturing index rose to a reading of 26.2 in December, from 22.7 in the previous month.
Analysts downplayed the mixed bag of economic data, noting that expectations for a solid fourth quarter of economic growth remained intact.
Pantheon said “Small revisions to consumption, net foreign trade and inventories” weighed on third quarter GDP, but insisted that its forecast for a 3% growth in the fourth quarter GDP remained unchanged.
A sharp rise in the Canadian dollar, meanwhile, added further downside pressure in the greenback as bullish Canadian inflation data lifted expectations for Bank of Canada monetary policy tightening in 2018.
USD/CAD fell 1.01% to $1.2706.
GBP/USD fell 0.01% to $1.3374, while EUR/USD fell 0.03% to $1.1869.
USD/JPY rose 0.01% to Y113.41 as the Bank of Japan left its monetary policy measures unchanged, signaling its attention to continue with its loose monetary policy measures.