Canadian dollar touches week low as U.S. economy shows growth

Canada’s dollar (FOREX:CADUSD) dropped to a more than one-week low after reports signaled a pickup in U.S. growth and the price of oil, the nation’s biggest export, traded at almost the weakest level since July.

The Canadian dollar fluctuated against its U.S. peer as American lawmakers remained deadlocked over the federal budget in a confrontation that risks a government shutdown on Oct. 1. The discount for oil sold by Canadian companies over the U.S. benchmark crude rose to its largest since February.

“The Canadian dollar continues to be driven by factors outside its border,” said Adrian Miller, director of fixed- income strategies at GMP Securities LLC in New York. “The U.S. dollar is rebounding after a few sessions after this fiasco in Washington, and that’s weighing on all other currencies.”

The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, was little changed at C$1.0314 per U.S. dollar at 3:34 p.m. in Toronto after touching C$1.0341, the weakest level since Sept. 16. One loonie buys 96.96 U.S. cents.

Canada’s dollar has gained 2% this quarter, trimming its yearly decline to 3.8%.

Government bonds fell, with the yield on benchmark 10-year debt up two basis points, or 0.01 percentage point, to 2.59% as the price of the 1.5% securities due in June 2023 dropped 11 cents to C$90.77.

Oil Discount

The discount Canada’s benchmark crude oil-grade, Western Canada Select, faced to West Texas Intermediate, its U.S. peer, was at $31 per barrel, the most since Feb. 4.

Futures on WTI (NYMEX:CLX13) rose for the first time in six days, gaining 0.3% to $102.94 per barrel in New York after falling to $102.20, lowest since July 8. The Standard & Poor’s 500 Index of U.S. stocks added 0.2%.

Jobless claims in the U.S., Canada’s biggest trade partner, decreased by 5,000 to 305,000 in the week ended Sept. 21, a Labor Department report showed. The median forecast of 49 economists surveyed by Bloomberg called for an increase in jobs to 325,000.

U.S. gross domestic product rose at a 2.5% annualized rate, unrevised from the previous estimate, after expanding 1.1% in the first quarter, Commerce Department figures showed. The median forecast of economists surveyed by Bloomberg was a 2.6% pace.

Canada’s economy grew at a 1.7% annualized pace in the second quarter, Statistics Canada reported Aug. 30, and is forecast to rise 0.5% in July after dropping that much the prior month.